Microsoft could soar 22% and will top a $3 trillion valuation as it's best posit...
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Microsoft could soar 22% and will top a $3 trillion valuation as it's best positioned to monetize generative AI, Morgan Stanley says
Microsoft stock is poised to top a $3 trillion valuation in early 2024 as it is best positioned to monetize generative AI, according to Morgan Stanley.
The bank called Microsoft a "Top Pick" and raised its price target to $415, representing potential upside of 22%.
"Microsoft likely emerges as an early 'Picks and Shovels' beneficiary" of generative AI, Morgan Stanley said.
Microsoft is likely to be the next mega-cap tech stock to reach a $3 trillion valuation after Apple reached the milestone last week, according to Morgan Stanley.
The bank called Microsoft stock a "Top Pick" and said it has 22% upside potential from current levels thanks to its "pole position" in the generative AI race that should help it quickly monetize the growing trend.
"Generative AI looks to significantly expand the scope of business processes able to be automated by software, and Microsoft stands best positioned in software to monetize that expansion, which accompanied with a still reasonable valuation makes Microsoft our Top Pick in large cap software," Morgan Stanley's Keith Weiss said in a Thursday note.
The bank increased its price target for Microsoft by 24% to $415 from $335. Microsoft shares traded up more than 1% on Thursday to $342.85 per share.
Weiss said that Microsoft's ability to leverage its more than $10 billion investment in OpenAI represents a potential $90 billion incremental opportunity for the company in 2025 as the company integrates generative AI technologies across its software offerings.
Weiss likened the advent of artificial intelligence to a "gold rush" that includes the "picks and shovels" players and the "gold miners."
"Impressively, Microsoft has taken leading positions on both fronts, with Azure OpenAI Services representing a compelling platform for companies looking to build (the Picks and Shovels) and a broader portfolio of Generative AI-based application functionality in the market or in preview, like Github Copilot," Weiss said.
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