Published - May 31st, 2023 @ 4:45 PM (GMT+2 )
Bullish Outlook for Microsoft
In the financial trading sphere, Credit Suisse analysts are bullish on Microsoft (NASDAQ:MSFT) , maintaining an Outperform rating on the tech giant's shares and boosting their price target by a notable 20% to reach a Street-high of $420 per share. Key to this optimism is the future role of AI technology, where Microsoft stands out as a top pick for the financial powerhouse.
AI: The Revenue Accelerator
Credit Suisse sees a bright future for Microsoft driven by advancements in ChatGPT/AI, anticipating a significant revenue increase. According to the bank's updated AI/GPT base case, Microsoft could generate $57 billion in revenue and an EPS of $2.90, outperforming the previous forecast of $40 billion in revenue and an EPS of $2.00.
Microsoft Office: Driving Growth
This positive outlook is largely attributed to Microsoft's advancements in GPT technology, specifically within its Office suite (Microsoft Copilot). The analysts incorporate these upgraded AI/GPT projections into their price target valuation. Microsoft Office continues to be pinpointed as a significant revenue growth contributor for the Redmond-based tech giant.
New Price Target by Piper Sandler
Joining in this optimism, Piper Sandler analysts have also increased their price target for MSFT, taking it from the former $348 to a new high of $400 per share. They credit this rise to anticipated EPS growth driven by AI developments.
The Transformation of Microsoft
In their view, Microsoft, once a sizeable $78 billion software company in 2013, has significantly evolved over the past decade. Now, the company's revenue for 2023 is projected to surpass a staggering $211 billion, with the Microsoft Cloud segment set to account for over $110 billion of this. Even as gross margins may shrink from 73.8% in 2013 to 68.8% in 2023, the substantial incremental revenue, profit, and cash flows from Microsoft Cloud effectively offset this decline
AI Boosts Top-Line Growth
Piper Sandler analysts believe that AI-driven growth could accelerate Microsoft's top-line growth over the next three years. Other key financial institutions, including Wells Fargo, Deutsche Bank, and UBS, have also upped their MSFT price targets. With shares already climbing 38.1% year-to-date, the outlook for Microsoft remains strongly optimistic.
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