Microsoft has been enjoying tremendous success this year, thanks to the growing excitement surrounding its implementation of artificial intelligence (AI). It seems that the technology giant will continue this upward trend in 2024, and it holds a crucial advantage over its competitors, according to Wall Street analysts.
As of Thursday’s premarket trading, Microsoft stock was up by 0.2% at $374.84, marking a 56% increase so far this year.
Despite the significant rise in stock value, Wedbush’s Daniel Ives is confident that the growth driven by AI will sustain. In a research note on Wednesday, Ives raised his target price on the stock from $425 to $450.
Ives is specifically banking on Microsoft’s ability to substantiate early results showing how its AI offering has helped the company gain market share in cloud computing, even surpassing Google-parent Alphabet.
While Alphabet shares saw a 0.3% increase in premarket trading, Amazon.com stock experienced a 0.4% increase.
Furthermore, Ives has confidence in the widespread adoption of Microsoft’s AI technology. He projects that over the next three years, more than 60% of the company’s installed customer base will utilize AI for commercial purposes, thereby contributing approximately $25 billion to Microsoft’s revenue by fiscal 2025.
“We continue to believe Microsoft is positioned favorably to navigate this and other potential cases. We think hyperscalers like Microsoft are best positioned to strike data licensing agreements as necessary, or to help partners like OpenAI do the same,” noted Macquarie analyst Frederick Havemeyer in a research note.
Macquarie has an Outperform rating with a $430 target price for Microsoft stock.