There was no denying that 2024 was a great year for the ‘Magnificent 7’ stocks, with Microsoft (NASDAQ:MSFT) certainly enjoying the spoils as well. All told, company shares have gained some 17% for 2024.
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However, the past half year has seen share prices drop amidst concerns over shrinking margins, slower growth guidance, and mega-AI expenditures.
And yet, there is no doubting that the trillion-dollar behemoth remains an everpresent part of the tech scene. As the clock winds down on 2024, what’s in store for MSFT in 2025?
The investor known by the pseudonym DT Invest believes that Microsoft is poised to capture healthy gains thanks in large part to its focus on AI.
“Microsoft’s positioning in the AI revolution is absolutely unique, and the current valuation presents a unique buying opportunity,” writes the investor.
DT Invest cites several key factors that will boost MSFT’s AI footprint, including a commanding 25% market share of the global cloud industry. The investor explains that this allows for both economies of scale and enhanced negotating leverage with potential suppliers and partners, among other advantages.
In addition, DT reminds readers, Microsoft is one of the largest investors in the disruptive OpenAI, one of the undisputed leaders in generative AI. Lastly, with $78 billion in cash at the end of last quarter, Microsoft’s deep, deep pockets will allow it to continue investing in the revolutionary technology.
Moreover, the investor has full faith in Microsoft’s leadership to continue steering the company on the path to profits. DT Invest notes that CEO Satya Nadella has had a remarkable track record in his decade at the helm, especially when it comes to MSFT’s successes in both the cloud and AI markets.
“The CEO factor should not be underestimated,” writes DT Invest. “With Satya Nadella in charge, Microsoft’s share price grew by more than 10 times, a truly staggering accomplishment.”
Forecasting 3% growth going forward, DT Invest calculates that Microsoft is some 21% undervalued, providing additional fodder for the investor’s bullish take.
“I think that for a wide-moat company like Microsoft, such a discount is a no-brainer investment opportunity,” writes DT Invest, who rates MSFT a Strong Buy. (To watch DT Invest’s track record, click here)
Wall Street certainly appears to share DT Invest’s optimism. With 27 Buy and 2 Hold ratings, MSFT enjoys a Strong Buy consensus rating. Its 12-month average price target of $501.69 would yield gains of ~14.5% in the year to come. (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.
