Piper Sandler calls Microsoft her strongest recommendation among large companies to own through the end of the year. According to CNBC, analysts at the brokerage firm see several elements that could raise the stock further.
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One catalyst is Microsoft’s “first mover advantage” in generative AI, i.e. the advantage the IT giant can enjoy by being first to market with a product or service. Earlier this year, Microsoft launched ChatGPT AI, a chatbot developed by OpenAI.
Microsoft has also expanded its plans for ChatGPT and is working with automakers to test AI technology in vehicles.
Piper Sandler describes Microsoft’s upcoming M365 Copilot as another catalyst for the stock. The feature is the company’s AI addition to core products like Word and Excel. Microsoft first revealed plans for Microsoft 365 Copilot in March, with sales expected to begin in early November.
Opportunities to grow revenues and earnings per share
“There are many potential income and earnings growth opportunities over the next three to five years,” the brokerage house’s analysts wrote in a new analysis, according to CNBC.
On Microsoft’s quarterly earnings call in late July, CFO Amy Hood said the company should see higher revenue in the second half of fiscal 2024 as it invests to meet growing demand for AI services.
A good year for the stock market
So far this year, Microsoft shares are up about 38 percent to $330.11, while the S&P 500 is up just over 12 percent. Piper Sandler believes there is more upside and is running a $400 price target on Microsoft, 21 percent above today’s level.
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