- Microsoft stock is well-positioned to monetize generative AI, with valuations expected to top $3 trillion in early 2024, according to Morgan Stanley.
- The bank called Microsoft its “top pick” and raised its price target to $415, with 22% upside.
- Morgan Stanley said, “Microsoft is likely to emerge as a beneficiary of the early ‘picks and shovels’ of generative AI.”
Microsoft is likely to be the next big tech stock after Apple hit a $3 trillion valuation last week, according to Morgan Stanley.
The bank called Microsoft stock its “top pick,” and thanks to the company’s “pole position” in the generative AI race, it should help monetize growth trends quickly, with a potential up 22% from current levels. said to be sexual.
“Generative AI is poised to greatly expand the range of business processes that can be automated by software. Microsoft is best positioned in the software space to monetize that expansion. This makes Microsoft a top pick for big software,” Morgan said. Stanley’s Keith Weiss said in a memo on Thursday:
The bank raised its price target on Microsoft by 24%, from $335 to $415. Microsoft shares rose more than 1% on Thursday to $342.85 a share.
Weiss said Microsoft’s ability to leverage its more than $10 billion investment in OpenAI represents a $90 billion increase in revenue for the company by 2025 as it integrates generative AI technology across its software offerings. I said it meant it was possible.
Weiss likened the emergence of artificial intelligence to a “gold rush” involving “pick and shovel” players and “gold miners.”
“Impressively, Microsoft has a leading position on both fronts, and Azure OpenAI Services is an attractive platform for companies looking to build (picks and excavators), either in the market or in preview. It represents the broader portfolio of generative AI-based application capabilities in Github Copilot,” Weiss said.
According to the memo, Microsoft could gain a lot of pricing power going forward by integrating AI capabilities into its popular software products such as Office 365, Azure and GitHub.
And sooner or later, investors will need to understand the impact AI will have on Microsoft’s finances, as more datasets will lead to more revenue for Microsoft’s Azure cloud services.
“Considering the consumption pricing model, the impact of increased demand will soon be reflected in Azure’s revenues, giving investors a better understanding of its strong positioning,” said Weiss.
And while Microsoft’s stock is up about 40% year-to-date, Weiss says its valuation hasn’t expanded based on historical averages, “despite its unparalleled position in generative AI.” concluded Mr.
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