Microsoft’s stock has seen a surge this year due to investors’ excitement over artificial intelligence (AI), and analysts believe there are more reasons for it to rise. Wells Fargo analyst Michael Turrin recently added Microsoft to the firm’s fourth-quarter Tactical Ideas List, rating the stock as Overweight with a target price of $400. This implies a potential gain of 27% from the closing price on Friday.
Turrin points out that while the stock has risen 32% this year, it dropped around 7% after the company reported fourth-quarter earnings in July. This dip presents a good buying opportunity, especially considering several potential positive factors ahead. One such factor is the potential stabilization of growth in Microsoft’s Azure cloud-computing business as a weak spell for customer spending comes to an end.
Turrin also mentions Microsoft Ignite, a product event scheduled for November, which could create positive sentiment about the company. He believes this event could bring notable announcements as Microsoft expands its AI-enabled Copilot offerings, along with other product announcements around AI-related services such as Azure, security, and Power Platform.
Another analyst, Brent Thill of Jefferies, cites the potential impact of Microsoft 365 Copilot, an AI-based assistant feature on products like the Bing search engine and Office software suite. Thill’s what-if analyses show that M365 Copilot has the potential to drive roughly 8% upside to revenue estimates for FY25, without assuming any impact from AI.
Thill rates Microsoft as a Buy with a $400 price target. As of Monday, the stock was trading 0.7% higher at $317.96.
In conclusion, analysts remain bullish on Microsoft’s stock due to its AI advancements and upcoming product events. The potential for growth in the Azure cloud-computing business, positive sentiment from Ignite, and the impact of AI-enabled features like M365 Copilot all contribute to the positive outlook for Microsoft’s stock price.
Disclaimer: The information provided here is for informational purposes only and should not be construed as investment advice. Investing in stocks involves risks, and individuals should do their own research or consult with a financial advisor before making any investment decisions.