By Brian Swint
Microsoft, one of the three biggest companies by market capitalization, is only just starting to reap the benefits of artificial intelligence.
That’s the view of analysts at Wedbush led by Dan Ives, who raised their price target to $550 from $500 in a note published Sunday and maintained an Outperform rating. While Ives is known for his bullish views on technology stocks, the analysts have based their stance on research conducted with Microsoft customers for insight into their future spending plans.
“The stock still has yet to price in what we view as the next wave of cloud and AI growth coming to the Redmond story with a strong competitive cloud edge vs. Amazon especially and Google,” said Wedbush. “It has become crystal clear to us that the monetization opportunities around deploying AI and ChatGPT in the cloud is a transformational opportunity.”
Microsoft mainly uses AI in its cloud service, known as Azure, and its Copilot features in Office and other programs. The company is now reaching an inflection point where it can harness AI to differentiate itself from competitors, ultimately boosting profits.
Wedbush says it’s like the moment Apple introduced the iPhone or, a “1995 moment” when the internet rapidly took off.
Microsoft was little changed in Monday’s premarket at $442.80. The stock is up 18% this year and has added 29% over the past 12 months.
Write to Brian Swint at brian.swint@barrons.com