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100 Billion Reasons You Need To Own Microsoft

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Microsoft is emerging as a dominant player in the field of artificial intelligence (AI), and this could be a game-changer for the company. With a 33% ownership stake in OpenAI and integration of AI technology into its products, Microsoft is well-positioned to leverage the potential of AI to double its growth rate.

100 Billion Reasons to Invest in Microsoft

A recent analysis suggests that Microsoft’s AI efforts could potentially generate an extra $100 billion in annual revenue by 2027. By fully integrating OpenAI’s technology, particularly its generative AI technology, Microsoft could lead the AI market and offer monthly subscription services to customers.

If Microsoft achieves this level of success, it could accelerate its sales growth rate by 9.5% annually through 2027. This translates to a consensus sales growth rate of 13% compounded annually, compared to the current rate of 11.8% under CEO Satya Nadella.

Analysts also project a potential boost in Microsoft’s EPS growth rate, reaching 26% annually by 2027. Such growth would be fueled by the successful integration of AI into Microsoft’s ecosystem and the resulting increase in sales.

The Financial Potential of Microsoft’s AI Initiatives

The monetization of AI technology has already begun for Microsoft. The company’s GitHub Copilot tool, which suggests new lines of code to programmers, has attracted over 10,000 companies as customers. By expanding the use of AI technology across its office suite and other software, Microsoft could generate additional revenue of up to $48 billion annually.

Estimates suggest that by 2027, Microsoft’s revenue from AI-powered features could reach $99 billion. While these figures are projections, they indicate the significant growth potential AI offers for Microsoft’s financial performance.

However, it is important to note that investing in Microsoft should be based on fair value and not speculative mania. Currently, the company is trading at a premium, and the current price may be considered overvalued. If the stock reaches fair value, the consensus total return potential could range from 138% to 561% by 2030.

A Low-Risk Investment in AI

Investing in Microsoft, a AAA-rated Ultra SWAN stock, is seen as a low-risk way to participate in the AI revolution. The company’s financial stability and track record make it an attractive option. However, cautious evaluation is necessary to determine the appropriate entry point for this investment.

Diversity in investment portfolios, including a 5% to 7% allocation in Microsoft or ETFs with exposure to the company, is advised for those seeking long-term success. Microsoft’s potential for growth through AI initiatives makes it a strong candidate for long-term investment.

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