Ahead of Microsoft’s (NASDAQ:MSFT) fiscal first-quarter results on October 24, analysts at Morgan Stanley said the tech giant is “underpriced” based on the potential upside of its generative artificial intelligence across its infrastructure and apps.
According to Keith Weiss, Microsoft is well-positioned to tap the booming generative AI market, which has seen massive adoption recently. Keith, who has an Overweight rating on Microsoft, said the company can monetize this part of its business, although the analyst noted that adoption may well be years away.
Keith continued that Microsoft 365 Copilot – an artificial intelligent assistant on Microsoft platforms and apps – may not see that immediate boom in attention. The AI assistant is scheduled to be available in November, as announced by Microsoft last month.
Keith also mentioned that a recent poll indicated that cloud optimization efforts may be “more persistent” than previously assumed, while the slowdown is still expected to be temporary. According to Keith, Microsoft is still in the early phases of this innovation cycle, and fundamental momentum is likely to increase through FY24. Following a dismal June quarter report, he sees buy-side expectations for 1Q becoming more feasible.
What is the Future of Microsoft Stock?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 31 Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic above. Furthermore, the average MSFT price target of $398.34 per share implies 19.68% upside potential.
