Morgan Stanley raises Microsoft price target ahead of earnings on GenAI strength
Shares of Microsoft (NASDAQ:MSFT) climbed slightly in Tuesday premarket trading after Morgan Stanley analysts raised the price target on the stock from $415 to $450, suggesting an upside potential of more than 13.5% from the current share price.
MSFT closed 0.5% lower at $396.51 on Monday.
The PT hike comes as Morgan Stanley feels optimistic about Microsoft securing further share gins of the IT wallet thanks to the company’s “strong positioning across a broad GenAI portfolio.”
Moreover, analysts also raised their FY25 revenue and earnings 3% ahead of consensus estimates.
“Limited quantification of GenAI contribution in Q2 may disappoint investors, but a durable high-teens EPS growth should drive MSFT towards our $450 PT,” analysts wrote in a Tuesday note.
“With 68% of CIOs we survey expecting to adopt Microsoft GenAI solutions over the next 12-months, we remain confident in upside to our above consensus estimates,” the team said.
Analysts believe the potential for further growth in MSFT is grounded in its strategic alignment with crucial long-term trends in the software sector.
The company's robust positioning in key secular themes, coupled with an overall improvement in IT spending, creates a foundation for sustained high-teens EPS growth. This growth trajectory, though substantial, is not yet fully captured in the current price-to-earnings (P/E) multiple.
However, investors seeking specific data points in the Q2 financial results to validate the impact of GenAI on performance may find their expectations unmet, analysts warned.
“That said, we remain convinced investor patience will be rewarded, and in this preview dig into the key investor debates assessing the growth potential versus margin impacts for
Read more on investing.com
