After a not-so-enterprising 2022, shares of Microsoft Corp. MSFT have seen a nice recovery this year, thanks to its stepped-up artificial intelligence, or AI, initiatives.
AI Hype Lifts Stock: Microsoft’s proactive move to deepen its partnership with OpenAI, the firm behind the GPT large language model, has proved healthy for the stock. The software giant announced in late January a multi-year, multi-billion dollar investment in Open AI, on top of its previous investments in 2019 and 2021. The agreement provided for Microsoft to integrate GPT-4 in its Bing search engine and its cloud services.
See Also: Best Technology Stocks Right Now
From an insignificant presence, Microsoft is plotting to make meaningful inroads into the search market through GPT integration.
AI, according to Wedbush analyst Daniel Ives, is an $800 billion opportunity. “For Microsoft, the monetization opportunity of Bing is very real as every % share that moves from Google search to Bing’s new rebirth translates to billions of advertising dollars in Redmond’s pocket,” said the analyst.
Microsoft stock started 2022 on a weak note and moved broadly lower and pulled back toward a low in early November. A bumpy recovery followed and the stock has been broadly higher after bottoming in early January of 2023. Some of the upside is also attributable to the broader market recovery seen this year, which is led by tech stocks.
On Monday, the stock formed a long-legged Doji, which signals indecision among traders and settled at near-term support around $281.77.
Source: Benzinga Pro
Can Earnings Give A Boost: Analysts, on average, expect the company to report earnings per share of $2.23, almost flat with a year ago, and revenue of $51.02 billion, up 3.40% year-over-year.
Investors may also look forward to management commentary on the AI integration and potential benefits.
Returns From Microsoft: A $1,000 invested in early November intraday low of $213.43 (Nov. 4, 2022) would have fetched about 4.7 shares. The same 4.7 shares would now be worth $1,320 (based on Monday’s closing price of $281.77).
This would mean a return of about 32% in about 4-1/2 months. Over the same period, the broader S&P 500 Index returned about 10% and the tech-heavy Nasdaq 100 about 15%.
The average analysts’ price target for Microsoft, according to data compiled by TipRanks, is $306.95, suggesting nearly 9% upside potential.
Price Action: Microsoft shares closed Monday’s session at $281.77, down 1.40%, according to Benzinga Pro data.