Microsoft stock is off to a great start in 2023, and analysts at Wedbush think there’s even more room to run.
The firm reiterated its ‘Outperform’ rating and raised its price target for Microsoft to $315 from $290 after the tech giant’s shares have already gained nearly 20% to start 2023. The stock traded at $286.45 as of Wednesday afternoon.
At the crux of Wedbush’s analysis is Microsoft Azure.
“Azure growth [is] stable and most deals [have been] green lighted,” analysts said. “...“We believe 90%+ of Azure/Office 365 large deal activity is still on track through our MSFT partner checks for the June quarter with modest push-outs and downsizing of major cloud projects seen in the field containable thus far.”
“Our thesis remains that the cloud and underlying Office 365/Windows ecosystem is going to comprise a bigger and bigger piece of Redmond going forward and will ultimately spur growth and margins (moderate cost cutting in motion as well) into FY23/FY24 despite this downturn.”
The analysts also pointed to ChatGPT as a future driver of revenue.
“We also believe Redmond is just starting to hit its next gear of growth with ChatGPT and AI also adding a new layer of growth to the MSFT story over the coming years,” analysts said. “[T]he next step [is] ChatGPT/AI monetization on both the consumer and enterprise fronts.
The Azure/Office 365 deals and the potential of ChatGPT are enough to add about $20 to Micosoft’s “sum-of-the-parts” valuation.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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