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Microsoft should become the next $3 trillion company by early 2024 - Wedbush

Published 07/05/2023, 07:39 AM
© Reuters.  Microsoft (MSFT) should become the next $3 trillion company by early 2024 - Wedbush's Ives

Wedbush analysts reiterated an Outperform rating and a $375 per share price target on Microsoft (NASDAQ:MSFT) as the tech giant continues to gain cloud market share.

The analysts strongly believe that Microsoft shares could receive a $40-50 per share boost on the back of the ChatGPT/AI monetization.

"We believe Nvidia's "jaw dropping guidance" heard around the world is a direct AI barometer for Redmond as our recent June quarter checks further confirm the monetization opportunity for MSFT is happening much sooner than the Street had anticipated in the field," the analysts said in a note.

"We estimate for every $100 of cloud Azure spend with MSFT the last few years there is an incremental $35-$40 of AI spend that now is on the table which changes the game and TAM for Nadella & Co. looking ahead."

As a result, the analysts project that Microsoft should join Apple (NASDAQ:AAPL) in becoming the next $3 trillion company. This could happen as soon as early next year.

“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 into FY23/FY24 despite this downturn. 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.”

Microsoft shares are down 0.6% in pre-market Wednesday.

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