Microsoft Corp (MSFT)

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Microsoft's (MSFT) 'iPhone moment' is here declares Wedbush analysts
By: Investing | December 28, 2023

Wedbush raised its price target for tech giant Microsoft (NASDAQ:MSFT) to $450 from $425 in a note to clients Thursday, maintaining its Outperform rating on the stock. Analysts declared in their note that Microsoft's "'iPhone moment' is here."

Wedbush, which sees Microsoft as one of the best ideas for 2024, said the iPhone moment is based on the fact that artificial intelligence (AI) monetization is set to change the company's cloud growth trajectory over the next few years.

"In a nutshell, based on our recent work in the field, we believe over the next 3 years over 60% of its MSFT installed base will ultimately be on this AI functionality for the enterprise/ commercial, which changes the landscape for Nadella & Co going forward," analysts said. "While AI use cases will build markedly in FY24 its clear FY25 for Redmond remains the true inflection year of AI growth with pricing, beta customers, and use cases all being rolled out over the next 3-6 months."

Wedbush believes the stock has yet to price in what they view as the next wave of cloud and AI growth coming to the MSFT story in FY24 with a "strong competitive cloud edge vs. Amazon and Google." Furthermore, analysts said their firm's recent partner checks have been incrementally strong around Co-Pilot deployments with MSFT customers, and they estimate this could add another ~$25 billion to the company's top line by FY25.

"Over the last few weeks, in our numerous conversations with Microsoft customers, partners, and field checks, it has become crystal clear to us that the monetization opportunities around deploying AI and ChatGPT in the cloud is a transformational opportunity across the industry with Redmond in the driver's seat," added analysts.

They declared: "We continue to believe this is a '1995 Moment' with a transformational tech spending wave not seen since the start of the Internet."

Microsoft shares have performed well in 2023, climbing more than 52%. Ahead of the open on Thursday, they are up around 0.3%, trading above the $375 mark.

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