The surge of interest in artificial intelligence has propelled Microsoft stock to new heights in 2023, and according to Oppenheimer, the tech giant’s impressive run may continue into 2024. With its “unique AI position” and strong business model, Microsoft is deemed the top large-cap stock pick for the coming year.
So far this year, Microsoft shares have gained a remarkable 55% and reached an all-time high in November. The company’s significant involvement in AI, including its stake in ChatGPT developer OpenAI, has been a major driving force behind its increasing stock value. Additionally, Microsoft’s presence in other flourishing tech areas like cloud computing, combined with a positive macroeconomic outlook that anticipates lower interest rates benefiting the tech sector as a whole, have contributed to its success.
However, Microsoft’s exceptional performance isn’t expected to end anytime soon. Oppenheimer analyst Timothy Horan enthusiastically named the tech giant as the group’s top large-cap pick for 2024. Horan rates the stock as Outperform with a price target of $410, which indicates a potential upside of more than 10% from its current levels.
Horan expressed his unwavering optimism about Microsoft’s future prospects, stating, “We remain very optimistic about their near-term and long-term prospects.”
In 2024, Oppenheimer’s stock-picking strategy revolves around favoring companies with strong business models and assets that possess new revenue potential. In this regard, Microsoft stands out due to its Cloud and AI offerings, making it a perfect fit for this investment thesis.
With already impressive gains and promising future prospects, Microsoft is poised to maintain its strong position in the market and continue to deliver substantial returns for investors in the years to come.
Microsoft’s Cloud Service Providers to Experience Record Capital Expenditures by 2024
The cloud service industry is expected to witness a surge in revenue in the coming years, with the largest providers projected to make record capital expenditures by 2024. Among these companies, Microsoft is anticipated to generate the highest returns on their investments, primarily due to its robust pricing power.
Microsoft’s value proposition is further amplified by its focus on Artificial Intelligence (AI), especially through its partnership with OpenAI. Analysts have engaged in conversations with the company, which indicate a potential revenue boost from generative AI in the future. Additionally, unlike its competitors, Microsoft is less affected by chip supply issues.
What sets Microsoft apart is its unparalleled AI infrastructure and large language models, combined with user-friendly applications for improvement. Moreover, the company boasts relationships with almost every global enterprise, all of whom are eager to leverage AI technologies promptly.
Prior to the recent AI boom, the cloud computing business was already a high-growth sector. This trend is expected to continue in 2024, with Microsoft’s Azure product demonstrating strong demand. As a result, Microsoft is likely to gain market share against its competitor, Amazon’s AWS.