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Is it too late to buy Microsoft stock?

Is it too late to buy Microsoft stock
Ivan Zhelev

The shares of the tech giants come with a high price tag, but that doesn’t mean there are no worthwhile investment opportunities.

With a market capitalization of $2.8 trillion, Microsoft (NASDAQ: MSFT) has seen a remarkable near 60% increase in 2023, surpassing the 17% boost in the S&P 500 and the 35% spike in the Nasdaq Composite Index. 

MSFT trading chart for one month. Source: Finbold

However, some investors are understandably concerned that Microsoft’s most significant stock gains are behind it, and the current stock price reflects a higher premium compared to early 2023. 

Beyond the hype

Artificial intelligence (AI) appears to be a significant driver behind the upward trajectory of the stock in 2023, as emphasized by CEO Satya Nadella in recent earnings updates. 

Nadella has consistently highlighted AI as a key avenue for growth in the coming years, stated in late October

“We are rapidly infusing AI across every layer of the tech stack.”

The ongoing price increase isn’t solely based on the hype surrounding AI. Microsoft is enhancing the value of its cloud services. The cloud segment, for instance, expanded at 24% rate in the last quarter

Financial strength

The company earned $27 billion of operating profit last quarter alone, up 25% year over year. The gross margin is at 69.44% year to date and in the twelve months ending on September 30, 2023, Microsoft reported an earnings per share (EPS) of $10.32, marking an 11.09% year-over-year increase. 

A synthesis of projections from 33 analysts on TipRanks over the previous quarter indicates a 12-month average price target of $410.03 for Microsoft. 

This suggests a potential upside of 8,5% from its current price, leading to an overarching strong buy recommendation. Based on the last three months rating, Microsoft has received 31 ‘Buy’ ratings, 1 ‘Hold’ rating, and notably, 0 ‘Sell’ rating.

MSFT Wall Street analyst 12-month prediction. Source: TipRanks

The highest price target for the stock is $450, meanwhile the lowest price target is slightly below its current price.

MSFT is at a new high. Forming in a bat pattern and looking like the major false breakout in BTC before its big reversal.

(MSFT 5 years price performance. Source: TradingView)

However, It remains a relatively secure investment, especially in the context of the current inflation rate of 4.5%. And despite potential challenges, the stock could still be considered a sound investment and owning it will put some financial strength in a portfolio. 

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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