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Redmond-based Microsoft Corporation (MSFT), boasting a market cap of a whopping $3.1 trillion, is a global leader in software, services, and devices, revolutionizing technology since its establishment in 1975. Renowned for integrating artificial intelligence (AI) across its offerings, Microsoft remains at the forefront of technological innovation and service excellence.
Shares of the mega-cap tech company have outperformed the broader market over the past year. MSFT has gained 33.8% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 27.5%. In 2024, Microsoft stock surged by 11.8%, marginally outpacing SPX's YTD gain of 11.2%.
Narrowing the focus, MSFT's price performance surpasses the S&P Software & Services ETF SPDR (XSW), which has gained 28.1% over the past year. However, MSFT's double-digit YTD gain easily outshines the ETF's 2% returns during the same period.
Despite hurdles like rising costs and inflation, Microsoft's stock shines thanks to its robust cloud and AI prowess. But most recently, shares of Microsoft surged in after-hours trading following the better-than-expected Q3 earnings result on April 25, buoyed by strong performance in its cloud business.
For the current fiscal year, ending in June 2024, analysts expect MSFT’s EPS to rise 20% year over year to $11.77. Moreover, the company’s earnings surprise history is solid. It beat the consensus estimate in each of the last four quarters.
Microsoft’s stock has a consensus “Strong Buy” rating overall. Out of 37 analysts covering the stock, 33 advise a "Strong Buy" rating, three suggest a "Moderate Buy," and one says "Hold.”
This configuration has been steady over the past months but showing slightly more bullish sentiment than two months before, with 32 analysts suggesting a “Strong Buy.”
On May 17, RBC Capital Markets analysts boosted Microsoft's target price to $500 from $450, citing strong investor feedback and aggressive AI investment. They highlighted advancements like GPT-4o and Maia for cost efficiency, emphasizing Azure's growth and AI's role in expanding its cloud business. Meanwhile, Macquarie Equity Research maintained its "Outperform" rating and raised the price target to $475 from $460, optimistic about global reach, Azure, and potential from Activision Blizzard’s gaming base, foreseeing significant revenue from Game Pass subscriptions.
The mean price target of $470.26 suggests an 11.9% premium to MSFT from current levels. The Street-high target of $600 represents an impressive upside potential of 42.8%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
