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Microsoft Stock Analysis: MSFT Is Your Ticket to $500 Per Share in 2024

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Microsoft (NASDAQ:MSFT) has been rallying since the start of the month, but the recent run-up for Microsoft stock could soon taper off. This could simply mean sideways price action a while. It may even mean a slide in price. Considering the company’s AI capabilities and growth potential, the risk of a price correction is low.

More importantly, don’t assume this means that it’s time to take profit, and make an exit for what has clearly emerged as a blue-chip among AI stocks. Instead, hold on, and be patient, as while it may take some time, another big liftoff will ultimately take shape.

Microsoft Stock: 3 Reasons for the Latest Upward Surge

Microsoft pulled back after reporting its latest quarterly results on April 25, but not too long after that, shares quickly got back on an upward trajectory. The reasons for this are threefold. First, the market’s positive response to other “Magnificent Seven” earnings releases provided a boost for MSFT.

Second, positive macro news, such as news of cooling inflation, provided a boost for Microsoft stock as well. Third, something more pertinent to the MSFT bull case. That would be news of further progress for capitalizing on the generative artificial intelligence growth trend has bolstered bullishness. A prime example is this week’s unveiling of Microsoft’s CoPilot+ AI-enabled PCs.

Besides direct examples of Microsoft’s AI progress, as we recently pointed out, things are looking even more promising at OpenAI. Microsoft has financially-backed OpenAI, and stands to benefit economically from the ChatGPT developer’s further commercialization efforts.

These latest efforts include plans to launch an OpenAI-powered search engine, as well as plans to integrate its AI technology into Apple’s (NASDAQ:AAPL) upcoming iOS 18 operating system. Again though, while MSFT has kept climbing, hitting new all-time highs along the way, another cool-down in investor enthusiasm may be on the horizon.

Calm Before the Next Big Wave

While the aforementioned developments help to give substance to the latest Microsoft stock rally, the pace of big news could soon slow down once again. As it’s not until late July that the company again releases quarterly results, over the new months, MSFT could revert to sideways price performance.

Like we hinted above, shares could even dip a little. For the most part, due to possible concerns about valuation, Microsoft currently trades for 36.4 times forward earnings. This represents a material premium to other software-focused Mag 7 stocks. Yet while bullish sentiment may potentially decline by a small amount in the near-term, this will probably prove short-lived.

As soon as the next quarterly earnings release, confidence in Microsoft’s AI-powered growth runway stands to bounce back. Updates to guidance could strongly suggest that the company not only meets, but beats, forecasts for the coming fiscal year ending June 2025.

Sell-side estimates currently call for Microsoft’s revenue to grow by around 14.4% next fiscal year. Earnings per share consensus calls for earnings growth of 12.6%, from $11.83 to $13.32. However, the top end of estimates call for revenue and EPS growth north of 20%.

The Verdict: Hold On, and Feel Free to Buy More on Weakness

In the coming quarters, if Microsoft continues to crush it, especially in areas like cloud computing and AI software, there’s strong potential for MSFT to make a move to even higher price levels.

How high? Assuming that higher-than-expected growth would likely enable shares to maintain their current premium valuation, reaching $500 per share could arrive far sooner than you may think.

Over a multiyear time frame, there’s still strong potential for shares to deliver strong, steady gains, as above-average levels of growth persist thanks to the gen AI growth trend.

In the meantime, though, Microsoft stock could soon go from bull market mode, back to treading water. However, that’s nothing to fear. Instead, hold onto any existing positions, and feel free to add to/enter positions on any short-term weakness.

On the date of publication, Louis Navellier had a long position in MSFT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

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The post Microsoft Stock Analysis: MSFT Is Your Ticket to $500 Per Share in 2024 appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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