In the last 5 years, EPS growth has been 24.3% annually. Therefore, if the current growth momentum and PE multiples continue, it is likely that MSFT will reach $1000 anywhere between 2028 and 2030
Microsoft Stock Forecast 2024 is $384
Microsoft Stock Price Target for next 12 months is $428.4
Metric | Value | Trend |
---|---|---|
Current Price | $410.00 | Higher |
Trading Volume | $10.8 M | Steady |
Article Coverage: Microsoft Performance Summary, Analyst’s forecast for next 12 months, Aggregated Forecast 2023-27, Will Microsoft reach $300? Bull Case vs Bear Case
Last 5 Days | +0.1% |
Last 1 Month | +3.2% |
Last 6 Months | +26.9% |
Last 12 Months | +62.7% |
Microsoft Price Prediction: Microsoft has been trading uptrend from the last few months. Microsoft stock showing strong bullish momentum for the future.
Microsoft has been trading above $400. Currently it was trading at $409 and likely to cross more than $450 in the next few months.
Read about Microsoft Stock Split
Average MSFT Stock Forecast for the next 12 Months | $428.4 |
Mizuho | $420 |
Evercore ISI Group | $432 |
Tigress Financial | $475 |
RBC Capital | $390 |
Wedbush | $425 |
the stock.
During Microsoft’s annual shareholder meeting on December 7th, 2023, the company celebrated a year of notable accomplishments across cloud computing, gaming, and productivity, terming it a standout year.
However, the spotlight also fell on the ongoing concerns surrounding Microsoft’s affiliation with OpenAI. Shareholders voiced apprehensions regarding potential risks linked to large language models (LLMs) like ChatGPT.
Microsoft acknowledged these worries and emphasized its steadfast dedication to responsible AI advancement, underscoring the ethical principles and protective measures in place. Shareholders particularly emphasized concerns about potential hazards associated with LLMs, citing worries about misinformation, bias, and possible misuse. Satya Nadella, Microsoft’s CEO, acknowledged these concerns, affirming the company’s commitment to responsible AI development.
He outlined Microsoft’s AI principles, prioritizing fairness, accountability, transparency, security, privacy, and inclusivity. Additionally, he spotlighted the measures enacted to alleviate risks tied to LLMs, encompassing content moderation, safety research, and user education.
Profitability
Margins
Solvency
Liquidity
Growth
Valuation
Dividend
Future Outlook
This comprehensive analysis showcases MSFT’s strong financial standing, consistent growth, and positive outlook, albeit with a valuation considered slightly expensive.
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UTC: Feb 22nd, 2024 06:05 PM
UTC: Feb 22nd, 2024 04:47 PM
Overall Outlook | Neutral |
1. Market’s Wisdom | Partially Bullish |
1a. Market Data | Partially Bullish |
1b. Technical Recommendation | Neutral |
2. Crowd’s Wisdom | Neutral |
2a. Social Media Buzz | Steady |
2b. Social Media Sentiment | Steady |
One of the FAAMG stocks, Microsoft has been a good investment. FAAMG is an abbreviation for five top-performing tech stocks in the market, namely, Meta (formerly Facebook), Amazon, Apple, Microsoft, and Alphabet’s Google. Here are the reasons to invest in Microsoft stock:
Strong financials: Microsoft has maintained strong financials. The market cap of Microsoft has been either over $2T or close to it. It is one of the largest companies in the world and has shown consistent revenue growth and high-profit margins.
Strong leadership: Microsoft has a strong leadership team. The company is currently led by CEO Satya Nadella, who has been credited with turning the company around and leading it through a successful transition to the cloud.
Diversified revenue streams: Microsoft has a diversified business model, with revenue coming from a variety of sources. The latest partnership with ChatGPT is likely to open up new revenue sources for Microsoft in the future. This diversification makes the company less reliant on any single product or service, which can reduce its exposure to risk.
Cloud computing growth: Microsoft has been investing heavily in its cloud computing business, which includes its Azure platform, the biggest rival of Amazon’s AWS. This segment of the business has seen strong growth in recent years and is expected to continue growing as more companies move their operations to the cloud.
Despite being the major operating system provider, Microsoft has failed to compete with Google when it comes to Web search. However, Microsoft’s recent ChatGPT bet could change things forever.
Microsoft recently launched a new version of Bing which comes with an integrated AI platform, ChatGPT. This is the biggest bet of Microsoft to compete with Google.
However, how this will affect the search industry is for time to decide. If Microsoft is able to increase its acceptance in the search industry, this will directly help the MSFT stock price surge.
Competition: Microsoft is now in multiple businesses but it faces intense competition in many of its key businesses. Apple’s macOS is its Windows competitor, in cloud computing, it is competing against Amazon, and its Gaming console Xbox competes with Sony’s Play Station. This competition could lead to pricing pressure and could make it more difficult for the company to maintain its market share and profitability.
Dependence on key products: Microsoft has diversified its business but for a major part of its revenue it relies on key products like Windows and Office. If demand for these products were to decline, it could have a significant impact on the company’s financial performance.
Regulatory risks: As a large and influential tech company, Microsoft could be subject to increased regulatory scrutiny in the future. This could result in fines or other penalties and could impact the company’s financial performance.
Bull Case
However, with the macroeconomic headwinds easing out in 2023, Azure revenue is expected to shoot up again to mid-50% growth. Also, the Intelligent Cloud segment, which is primarily made up of Azure revenue contributes to around 40% of the company’s revenue in each quarter.
According to Fortune Business Insights, the cloud computing market is expected to see a CAGR of around 17% between 2022 and 2028 and Azure is responsible for 21% of market stock, the second largest after Amazon Web Services, Microsoft is in a big beneficial position to cash in from the growing segment.
Additionally, Microsoft is using its financial power over Sony to make acquisitions at Xbox Game Studios. The most important deal is a $68.7 billion offer to buy out Activision Blizzard. This deal is expected to close during Microsoft fiscal 2023, ending in June. With this, Microsoft will offer the most comprehensive catalog of gaming. So, instead of selling more consoles, it can enlarge its Xbox users and can hike subscription fees.
Activision Blizzard will give Microsoft a base of 361 million players and help it reach the 1 billion mark. As the gaming industry is shifting from core hardware PC service to subscription service, Microsoft is poised to gain big with its cash power.
Google and Comcast were the front runners & Microsoft was like a dark horse. But the argument that Microsoft does not have its streaming service helped them win the battle against the likes of Google and Comcast. They acquired digital ad business Xandr from AT&T in 2021.
After this acquisition, Microsoft can go to any company for digital ad service and can claim that it has capabilities and there is no direct competition also as Microsoft does not have a streaming service of its own.
In 2023, Microsoft can win can crack more such ad revenue deals and can add to its revenue a big amount. Also, the ad industry which has seen a major downfall in 2022, is expected to stand out in 2023.
Also Read: Microsoft Stock Split
First of all, its highest growth segment Azure’s growth story deaccelerated i.e., it grew 50% in FY 2022 Q1, 40% in Q4, and now only 35% in Q1 FY 2023 despite that investors were expecting better numbers from Azure. But more worrisome is the overall growth outlook for Q2 FY 2023. Overall revenue is projected to grow only 2% YoY to $52.85 billion, missing analysts’ Q2 guidance of $56.05 billion by a fair distance.
Furthermore, Azure growth is expected to slow down even more to only the low 30% range. Although, investors can digest ups and down in the Personal Computing segment, but, do not want to see slowing growth in Azure, especially when its peer Alphabet’s Google Cloud saw momentum in recent quarters and is quite bullish going into the final quarter of 2022.
In 2023, If Microsoft reports weak guidance for its Q3 and Q4 for fiscal 2023 ending in June for any reason, it will certainly bring down its stock price as it did by more than 7% on October 26th, 2022.
In the Q1 fiscal year 2023, Microsoft reported a de-growth of 16% in the Personal Computing segment YoY which constitutes about 30% of the overall revenue of the company. With the recession impending in the first half of 2023, it is expected for more de-growth.
Is it Safe to Bet on Microsoft in 2023?
To conclude, Microsoft stock has fallen 31% since January 2022. While it has sailed the economic downturns better than its peers, the important question is what 2023 holds for Microsoft stock.
However, it has to be believed that 2023 will be the year for Microsoft due to a couple of reasons. First and foremost is its diversification of business i.e., it is no longer only a Windows company and its cloud computing segment stand out among others. Its buyout of Activision Blizzard and partnership with Netflix will mark new avenues of revenue in 2023.
Trading at a P/E of 32.3 is not very cheap but it is below than its historical value in the last couple of years. Therefore, Microsoft stock will add great value to anybody’s portfolio in the coming year.
Note: collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.
–Vineet Agarwal
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