The Microsoft Analyst and Their Optimistic View
Microsoft Corp. MSFT, a trailblazer in the AI revolution, is set for a remarkable journey ahead, according to Wedbush analyst Daniel Ives.
The Microsoft Thesis: Ives not only maintained an Outperform rating on Microsoft’s stock but also upped the price target from $475 to $500. This move underscores Ives’ confidence in the tech giant’s potential growth, especially with the company’s emerging Copilot AI technology.
Ives described this pivotal moment as Microsoft’s ‘iPhone Moment,’ likening it to a historical turning point where AI will revolutionize Redmond’s cloud growth trajectory.
AI Adoption Accelerates: Driving Future Cloud Growth
Recent checks with Microsoft customers, CIOs, and partners have unveiled a surge in AI adoption and Copilot activity. Ives anticipates this trend will fuel more Azure cloud deals, propelling significant momentum in the coming months as AI applications expand across various industries.
Furthermore, Ives increased his estimate of the percentage of Microsoft’s customer base using Copilot from 60% to 70%, signifying growing acceptance and integration of the AI tool.
Outlook and Financial Projections
Looking ahead, Ives believes that Microsoft’s stock has yet to fully capture the immense potential of cloud and AI growth, particularly as AI applications in the enterprise sector lead to increased budget allocations in 2024 and 2025.
Based on insights from partners, Ives forecasts that Copilot’s deployment with Microsoft customers could add $25 billion to $30 billion to the company’s revenue by fiscal 2025. This represents a substantial contribution to Microsoft’s overall financial performance.
Summing up his outlook, Ives stated, “Our thesis holds that the cloud, alongside the Office 365 and Windows ecosystem, will play a more significant role in Redmond’s revenue streams, fostering growth and expanding margins through FY24/FY25.”
At the close of Monday’s trading session, Microsoft’s stock stood at $422.86, experiencing a 1.37% decline. However, in premarket trading on Tuesday, the stock saw a 0.55% increase, reaching $425.19. These fluctuations reflect the ongoing investor interest in Microsoft’s promising future amidst the evolving AI landscape.
