Microsoft (NASDAQ:MSFT) shared some big news earlier this month when it announced the development of its Majorana 1 quantum chip. Majorana represents a significant improvement in the abilities of quantum chips, which in turn could speed up the timeframes for the development of this revolutionary technology.
The reaction from the markets since the news broke, however, was somewhat ho-hum. Share prices have even slipped a bit since the announcement was made.
Of course, there are plenty of reasons the megatech company could be trading sideways, such as disappointing Azure growth, concerns over massive AI capex expenditures, and the ever-present worries over the state over the economy.
Still, Microsoft’s foray into the quantum realm – some 20 years in the making – generated plenty of excitement for one investor known by the pseudonym Weebler Finance.
“Microsoft’s Majorana chips mark a groundbreaking quantum computing breakthrough, potentially bringing practical quantum computers closer to reality,” asserts the investor.
Though believing in the inevitability of quantum computing, Weebler understands the concerns of others who are waiting for further proof of concept.
The investor likens this to the OpenAI story. Though OpenAI was established in 2015, the company only began to attract attention following the release of ChatGPT at the end of 2022. Weebler thinks that quantum computing could follow a similar trajectory.
“I believe many are closely watching for news and developments to surface, which could spark the next wave of optimism,” Weebler shares. The investor also notes the many technical and regulatory hurdles that still need to be addressed before real-world applications become practical.
However, even without MSFT’s non-quantum work, the investor argues the company is a strong long-term investment. Weebler is pleased with Microsoft’s EV/EBITDA ratio of 21.6x, arguing that this is pretty attractive among the systems software industry.
“Even without accounting for the potential benefits of the Majorana chips over the long-term, Microsoft appears quite attractively priced,” concludes Weebler Finance, who rates MSFT a Strong Buy. (To watch Weebler Finance’s track record, click here)
Whether they agree with the quantum thesis or not, Wall Street also feels pretty strongly that Microsoft is on the right path. With 29 Buy and 3 Hold ratings, MSFT boasts a Strong Buy consensus rating. Its 12-month average price target of $510.38 would yield gains approaching 30%. (See MSFT stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.