Bloomberg News reports that Artificial Intelligence driven profits can boost Microsoft Corporation to join the list of the elite category in terms of stocks. And the market capitalization may be as much as $3 trillion and more.
What do analysts at Morgan Stanley have to say?
According to the analysts at Morgan Stanley, who have put the price target at $415 for the software stalwart, the valuation will be approximately $3.1 trillion. The analysts laid by Keith Weiss have revealed that Microsoft has been their top selection amongst software companies with a large cap. They also said that the company is placed best in this segment and will benefit from the growth of artificial intelligence.
There is an AI frenzy in the market.
It is being observed that a market frenzy exists for all things related to AI, which has caused the shares of Microsoft to get supercharged. Following the viral success of OpenAI Inc, which Microsoft is backing, has been responsible for fueling a lot of thrill amidst the successful introduction of the ChatGPT tool.
Microsoft is currently aiming at overhauling the entire Office apps lineup. It includes Excel, Outlook, Word, and PowerPoint. OpenAI technology will drive these office apps.
Is the value reasonable?
Bloomberg News reports that despite a share price rally of 42% in the current year, the valuation is reasonable. The PEG ratio, also known as the price-earnings multiple and divided by the anticipated percentage growth in earnings, continues to remain in tandem with the historical averages, although there is unrivaled AI positioning.
Weiss increased the price target from $335 to $415. This is the second highest amongst analysts. Morgan Stanley has rated Microsoft overweight since the beginning of 2016. The stock gained more than 500% in the same period.
What is the scenario for the rest of Wall Street?
The rest of Wall Street is currently very bullish related to the stocks. And 52 analysts have rated it an equivalent or buy. Yet, just three have price targets that indicate that Microsoft will get close to the historic $ 3 trillion in market capitalization by the following year, as per data that Bloomberg compiled.
