Trends often come and go, but some are destined to stick around long after the initial buzz subsides. With the rise of ChatGPT and AI (artificial intelligence), few are betting against the latest craze becoming more prevalent in our daily lives.
In fact, after speaking with several CIOs recently, Wedbush analyst Daniel Ives says there is a general view AI technology is “transformative and will result in a massive spending wave as more use cases become front and center for enterprises and consumers alike.”
Over the next 5 years, via segments such as search, cloud, data analytics, cyber security, and machine learning, the ‘AI race’ will represent an $800 billion market opportunity, says the 5-star analyst.
With its deal with the ChatGPT maker OpenAI making recent headlines, the consensus is that, amongst the tech behemoths, Microsoft (NASDAQ:MSFT) is currently leading the AI charge. That said, Ives thinks the race will be a long one, and anticipates that over the coming years, not only Google but also Apple, Meta, and other tech luminaries will spend billions in this AI arms race.
Still, Microsoft is well-positioned, and represented with a big monetization opportunity as every percentage share that heads over from Google search to Bing is “billions of advertising dollars in Redmond’s pocket.” That said, the onus is now on Microsoft to execute this opportunity.
However, Search gains aside, this is just the tip of the iceberg on the AI front, and during the course of the year, as the “AI Game of Thrones battle” takes place, Ives expects further cloud integration with Azure.
Summing up, Ives said, “We believe that this strategic investment will massively boost the cloud stalwart to a robust position in the battle for AI demand as MSFT’s cards are now on the table and the AI strategy picking up significant traction.”
All told, while Ives’ bull-case price stands at $300, for now he maintained a price target of $280 to go alongside an Outperform (i.e., Buy) rating. This suggests the shares will climb 8.5% higher over the coming months. (To watch Ives’ track record, click here)
Most on the Street agree with Ives; the stock’s Strong Buy consensus rating is based on 25 Buys vs. 3 Holds and 1 Sell. The forecast calls for 12-month gains of ~15%, considering the average target clocks in at $291.70. (See Microsoft stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
