The value is “still reasonable,” says Weiss, despite a 42% increase in share price this year. “Remains in line with historical averages, despite the unrivaled generative AI positioning,” he said of the stock’s so-called PEG ratio, which is the price-earnings multiple divided by the predicted percentage increase in earnings. Growth-oriented investors frequently use the PEG ratio as an indicator.
Gains from AI might push Microsoft Corp. into the exclusive club of equities with a market capitalization of over $3 trillion, joining Apple Inc.
According to Morgan Stanley analysts, who have set a new price objective of $415 for the software giant, the company is now valued at almost $3.1 trillion. Microsoft was chosen by the analysts as their top option among big-cap software businesses, according to Keith Weiss, and they believe it is best positioned in the industry to gain from the expansion of the market.
Weiss said in a note that “generative AI looks to significantly expand the scope of business processes capable of being automated by software.” In terms of software, “Microsoft stands best positioned to monetize that expansion.”
Microsoft shares have increased significantly this year due to a market frenzy for everything AI-related. With its ChatGPT tool’s viral popularity, Microsoft-backed startup OpenAI Inc. has generated a lot of enthusiasm. Microsoft is now working to update every Office application in its catalog.
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The value is “still reasonable,” says Weiss, despite a 42% increase in share price this year. “Remains in line with historical averages, despite the unrivaled generative AI positioning,” he said of the stock’s so-called PEG ratio, which is the price-earnings multiple divided by the predicted percentage increase in earnings. Growth-oriented investors frequently use the PEG ratio as an indicator.
Weiss increased his price objective from $335 to $415. Following Redburn’s $450 estimate, that is the second-highest target among the analysts tracked by Bloomberg. Since early 2016, Microsoft has had an overweight rating from Morgan Stanley, and during that time, the stock has increased by more than 500%.
With 52 analysts giving the company a buy or similar recommendation, the stock is likewise enormously popular on the rest of Wall Street. Only three of them, however, have price objectives that would indicate Microsoft reaching the unprecedented $3 trillion market cap.
