Microsoft Stock Analysis: Is This the Perfect Time to Invest in MSFT?
Microsoft (NASDAQ: MSFT) stock reached a 52-week high of $468 on July 5, but has since experienced an 11% decline. With Q4 fiscal year 2024 numbers recently reported, there is skepticism surrounding the growth potential driven by artificial intelligence (AI).
Despite the short-term correction, Microsoft’s big AI investments are expected to yield positive results in the coming years. While further correction is anticipated, a buying opportunity may arise if the stock trades in the range of $350 to $370.
Chief Financial Officer Amy Hood believes that Azure growth will accelerate in the second half of 2025, hinting at soft earnings in the near term. This could keep Microsoft stock in a downtrend as investors shift focus from AI hype to tangible results.
Growth from Co-Pilot in Office 365 and Azure AI is promising, with Microsoft 365 consumer subscribers growing by 10% to $82.5 million. The potential for recurring revenue from AI services is significant, with estimates suggesting a revenue potential of $200 billion in the next five years.
Microsoft’s strong cash flow potential, with reported operating cash flow of $119 billion, positions the company for aggressive investments in cloud and AI offerings. This could lead to accelerated growth for Azure in the coming years.
In conclusion, while the AI hype may fade in the short term, Microsoft’s strategic investments make it a strong contender in the AI market. Waiting for further correction to invest in Microsoft stock at levels of $350 to $370 could potentially yield significant returns in the future.
Disclaimer: The opinions expressed are those of the writer and do not reflect the views of InvestorPlace.com. The writer does not hold any positions in the securities mentioned.
By Faisal Humayun, Senior Research Analyst