Microsoft (MSFT, Financial) shares are nearing a record high, driven by a rebound in its Azure cloud computing business. The stock is only 1.5% below its peak from July last year and has surged 16% this month, marking its best performance in over three years. This growth is fueled by a broader stock market rally and better-than-expected Azure performance, with investors optimistic about AI's role in sustaining growth.
In contrast to last year, when concerns over AI competition and sluggish Azure growth hindered Microsoft, the stock has risen 9% this year, outperforming most tech peers except Meta. The company's strong earnings report for the third quarter, with Azure revenue growing 33%, has been a significant highlight.
TD Cowen analysts predict Azure's AI-related revenue will skyrocket from $4 billion in 2024 to $24 billion in 2026. They have raised Microsoft's target price from $490 to $540, suggesting an 18% potential upside. Currently, Microsoft trades at 30 times its expected earnings, above the Nasdaq 100 average.
Despite recent stock fluctuations, analysts remain optimistic about Microsoft's long-term potential in AI, positioning it as a prime investment opportunity.
Become a Premium Member to See This: (Free Trial):
