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Microsoft Corporation (NASDAQ:MSFT), a company at the forefront of the AI revolution, is poised to gain even more momentum. wedbush Analyst Daniel Ives.
Microsoft analysts say: Ives maintained an outperform rating on Microsoft stock and raised his price target to $500 from $475. He emphasized that the stock remains on Wedbush’s “best ideas list.” The new price target suggests a potential upside of about 19% from current levels.
Microsoft’s theory: Ives explained that the upward price target revision follows the recent bullishness of AI Customer Check and the monetization of the “innovative” Copilot. This development is starting to emerge across a variety of customers and industries.
“We strongly view this as Microsoft’s ‘iPhone moment’ where AI will change Redmond’s cloud growth trajectory for years to come. Our recent research gives us further confidence in this move,” he said. “We are giving the same amount of money,” he said.
Ives said that checks with Microsoft customers, chief investment officers and partners indicate that adoption of generative AI and copilot activities is accelerating. He expects this to drive more Azure cloud deal flows and see significant momentum over the next six to 12 months as AI use cases proliferate across enterprise environments.
Ives also raised his estimate of the percentage of Microsoft’s installed base that will end up using Copilot from 60% to 70%.
Related item: best artificial intelligence stocks
Outlook: Analysts say the stock price does not yet fully reflect what is seen as the next wave of cloud and AI growth, as AI companies’ use cases will drive additional budget allocation to AI in 2024/2025. I don’t think so.
Based on partner research, Copilot adoption among Microsoft customers has been consistently strong, he said. This is expected to increase the company’s sales by an additional $25 billion to $30 billion by fiscal 2025.
“We believe the cloud and the underlying Office 365/Windows ecosystem will continue to account for a larger portion of Redmond’s revenue and ultimately drive growth and profits for the remainder of FY24/25. That’s our theory,” Ives said.
Microsoft ended Monday’s trading down 1.37% at $422.86, according to data from Benzinga Pro. In pre-market trading on Tuesday, shares rose 0.55% to $425.19.
Read next: As Apple battles Justice Department antitrust claims, analysts see AI opportunities and compare to Microsoft’s past
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