Microsoft’s stock has been soaring, primarily driven by the success of their AI products and an impending video game acquisition. The company’s shares easily surpassed the $300 mark earlier this year, leading some investors to question whether it’s too expensive to hold onto now.
However, the high price tag doesn’t necessarily mean it’s not worth holding onto. In fact, businesses are willing to pay a premium for Microsoft’s AI-enabled products, which bodes well for the company’s future growth. Additionally, Microsoft is inching closer to acquiring a well-known video game manufacturer, adding further potential to their already impressive portfolio.
While the approval for the video game acquisition is not guaranteed, Microsoft’s stock still receives a solid B rating, indicating it is a favorable investment. Investors who are not looking to increase their positions can consider holding onto their shares for now.
Previously, experts predicted that Microsoft’s stock could reach $400 within the next 12 months. This bullish outlook has only strengthened, despite Microsoft’s trailing 12-month price-to-earnings ratio being higher than the sector median. The company’s move to embed generative AI functionality in its popular products has created new revenue streams and further justified its value in the market.
Piper Sandler analyst Brent Bracelin even hailed Microsoft stock as an AI All-Star and assigned a $400 price target on the shares, highlighting the company’s advancements in this field.
Microsoft recently announced the pricing for its Microsoft 365 Copilot at $30 per user, per month. This product, which incorporates generative AI capabilities, helps businesses manage popular software applications such as Excel, PowerPoint, Outlook, and Teams. Analysts originally anticipated a lower price of $20 per user per month, further demonstrating Microsoft’s confidence in monetizing its AI-enhanced product line.
In addition to revenue from AI-enabled products, Microsoft is also seeking income from video game sales. Their ongoing pursuit of acquiring Activision Blizzard, the developer behind popular games like Call of Duty, marks a significant expansion into the gaming industry. While the company faced resistance from the Federal Trade Commission in the United States, a recent decision in its favor suggests progress. However, Microsoft still faces potential challenges from the Competition and Markets Authority (CMA), the antitrust regulator in Great Britain.
The CMA has stated that it will likely come to a new provisional view on the Microsoft-Activision deal in the coming weeks. Shareholders may have concerns regarding pushback from British antitrust regulators, but they can hedge their bets by holding onto their Microsoft stock without making additional investments.
Despite regulatory hurdles, Microsoft’s innovative product lines and commitment to AI technology position them for continued growth. As a result, many analysts remain optimistic, projecting MSFT stock to potentially reach $400 or even higher in the future. This positive outlook, along with Microsoft’s strong market presence, has earned the stock a confident B rating.
In conclusion, Microsoft’s stock continues to perform well, driven by the success of their AI products and the potential acquisition of a prominent video game developer. Their AI-enabled products have proven to be lucrative, while the gaming industry presents another avenue for revenue generation. Although regulatory challenges exist, Microsoft’s advancements in AI and the positive market sentiment surrounding their stock suggest long-term value and growth.
