Microsoft might win the award for probably the most unbeatable stock of the past decade. Since 2014, this massive tech conglomerate reliably chugged up and to the best, returning near 1,000% In 2023, Microsoft stock ran over 60%. Because of this, when taking a look at a Microsoft stock forecast, it’s difficult to inform if Microsoft’s best growth days are behind it. In spite of everything, the corporate is price nearly $3 trillion. Does it still have room to grow? I say yes…and you most likely already know the explanation why.

Generative artificial intelligence goes to usher in a recent era of technology at a pace that hasn’t been seen for the reason that invention of the smartphone. Microsoft is currently deploying this recent tech at scale across its multiple business lines, which can help the corporate proceed to grow over the approaching years.

As you’re about to seek out out, I’m very long on artificial intelligence. Learn what other investments I’m long on by testing my newsletter, Long, Long, Short. Now, on to my Microsoft stock forecast.

Microsoft Stock Forecast: Last 3 Quarters

To get an idea of how Microsoft’s business has performed recently, we want to look at their past few quarters:

• • • Revenue: $62 billion (+18% YoY)
    • Income: $22 billion (+33% YoY)

• • • Revenue: $56 billion (+13% YoY)
    • Income: $22 billion (+27% YoY)

• • Revenue: $56 billion (+8% YoY)
  • Income: $20 billion (+20% YoY)

Not bad growth in any respect for an organization that’s price nearly three trillion dollars. Microsoft has still bee growing revenue by double digits fairly consistently. If anything, I expect that this growth will increase in the approaching years because of AI.

Microsoft’s Most Recent Earnings Event

Microsoft reported its latest earnings announcement on January thirtieth, 2024. I dug through the transcript for you and wanted to spotlight a couple of takeaways:

• Deploying AI at scale: Microsoft has officially transitioned from “talking about AI” to “deploying AI at scale.” “GenAI” is not any longer a buzzword that’s used on earnings calls. It’s real tech that Microsoft is deploying into just about all of its offerings.

• GitHub Fun Fact: Over half of the Fortune 500 now uses Microsoft’s Azure OpenAI.

• GitHub Performance: Revenue accelerated to over 40% year-over-year, driven by all-up platform growth and adoption of GitHub Copilot (GitHub Copilot now has over 1.3 million paid GitHub Copilot subscribers, up 30% quarter-over-quarter.)

• Office 365 Users: Microsoft now has greater than 400 million paid Office 365 seats

The most important takeaway of the earnings report is nearly all business lines were up and to the best last quarter. Also, Microsoft is deploying AI across all of its business lines. Microsoft owns a ton of business lines, including:

• Microsoft Office Suite
• Azure Cloud
• Activision Blizzard
• GitHub
• Xbox
• LinkedIn

Microsoft is clearly going all in on AI – which can determine the success of its stock price over the approaching months and years.

Also, this wasn’t on the earnings call but Microsoft’s gaming revenue recently overtook Windows, because of its acquisition of Activision Blizzard. This gaming revenue will likely be one other growth driver for Microsoft over the approaching years It’s one more reason this Microsoft stock forecast goes to be bullish.

Microsoft’s OpenAI Investment

Microsoft was an early winner within the AI race, because of its $10 billion investment in OpenAI – the owner of ChatGPT. OpenAI has been on fire in 2023 and 2024 and recently reached an $80 billion valuation. After releasing ChatGPT, the buzzy tech startup has continued to impress investors with recent AI tools. Most recently, it launched Sora – a recent text-to-video AI tool that appears like it’s out of a sci-fi movie. Using AI, Sora can take a couple of sentences of text and create a really impressive short video.

Microsoft owns 49% of OpenAI. But, the true value of Microsoft’s relationship with OpenAI can’t be summed up in a numerical figure (OK, technically speaking, you’ll be able to and it’s $40 billion. But, I’m speaking figuratively). The actual value of Microsoft’s relationship with OpenAI is its access to OpenAI’s large language models, data scientists, engineers, and concepts. This relationship is what could help Microsoft emerge because the true AI leader over the approaching years, as a substitute of Apple (Nasdaq: APPL), Google (Nasdaq: GOOGL), or Amazon (Nasdaq: AMZN).

Along with its strategic partnership with the leading AI company, Microsoft can be working on an internal AI chip. This chip could help reduce Microsoft’s reliance on Nvidia (Nasdaq: $NVDA) and help improve the corporate’s profits over time.

Is Microsoft Overvalued?

When you’ve been involved within the stock market during the last yr then you realize that “AI” has become an enormous buzzword. Every tech earnings call is basically just “AI this” and “AI that.” So, this begs the query: are we in an AI bubble? If we’re, Microsoft may very well be drastically overvalued.

Here’s the thing: I won’t say that we aren’t in a bubble. AI stocks have seen astounding runs over the past few months. But, the phrase “bubble” typically implies that valuations should not backed by anything legitimate. For instance, NFTs were a bubble. So was the metaverse. These were really just abstract technology ideas. While the tech might need been feasible, there wasn’t really a market need for them. No person was lining up to go to “the metaverse.” But, AI is completely different.

AI has a whole bunch, if not hundreds, of real-world use cases and tools like ChatGPT have already develop into staples. If anything, it’s difficult to even comprehend the scope at which AI will change the world. But, that said, I wouldn’t be surprised if there was a little bit of a pullback with AI stocks over the short term – similar the the Dot Com crash.

Within the 2000s, the web firms that survived the Dot Co crash went on to dominate the 2000s and 2010s. An analogous scenario could play out with artificial intelligence where legitimate firms get overhyped. But, over the long run, the sector will create unprecedented growth.

TLDR: Long Microsoft, but use a dollar-cost average strategy within the short-term.

I hope that you just’ve found this Microsoft stock forecast precious in learning whether or not Microsoft still has room for growth. When you’re interested by reading more, you’ll want to subscribe below to get alerted of latest articles.

Disclaimer: This text is for general informational and academic purposes only. It shouldn’t be construed as financial advice because the writer, Ted Stavetski, just isn’t a financial advisor. 

Ted Stavetski is the owner of Do Not Save Money, a financial blog that encourages readers to speculate money as a substitute of saving it. He has five years of experience as a business author and has written for firms like SoFi, StockGPT, Benzinga, and more.