It would hardly be a stretch to say that the technology giant Microsoft (NASDAQ: MSFT) has recently been on a roll. Throughout 2022, the company’s early investment in OpenAI and its platforms – including the flagship large language model (LLM), ChatGPT – paid off massively.
Additionally, Microsoft recently launched its own artificial intelligence (AI) chatbot – Copilot – in earnest and managed to complete its $75.4 billion acquisition of one of the biggest names in gaming – Activision-Blizzard.
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Seemingly topping these achievements off, Microsoft recently published an impressive earnings report, beating expectations and logging $62.02 billion in revenue and $2.93 in earnings per share (EPS).
The company’s cloud businesses – including Microsoft Azure – also grew by a significant 30% through 2023.
Despite all this, investors have seemingly turned on Microsoft following the report, and the giant’s shares actually declined 0.28% during Tuesday trading and closed at $408.59. In Wednesday’s pre-market, at least up to press time, the drop continued, and MSFT is 0.92% in the red.
Given the string of Microsoft’s successes and investors’ most recently expressed displeasure, the question of how the technology behemoth might perform in the coming 12 months stands even more prominent than usual.
Analysts forecast Microsoft’s future price
While a rise as significant as Microsoft’s might indicate that a correction might be coming, Wall Street analysts forecast little other than continued growth for the company. In fact, out of 31 experts analyzed by TipRanks, all of them rate the behemoth as a buy, thus, the stock boasts an overall ‘strong buy’ rating.
On average, they believe MSFT stock will rise another 8.47% in the coming 12 months and reach a price of $443.20. The highest target, at the time of publication, stands at $600, while some see a slight downside to $385 as likely.
Technical analysis (TA) available through TradingView tells a similar story. Moving averages rate MSFT as a “strong buy,” and oscillators are neutral, meaning that the firm’s stock is, overall, a “buy.”
Could MSFT stock still disappoint?
Despite the undeniable string of successes, there has been some worrying news coming out of Microsoft and its subsidiaries – both old and new. For example, the company recently went on a firing spree in the recently-acquired Activision-Blizzard, cutting the headcount by 1,900 – 9% of the 22,000 Microsoft gaming employees.
While layoffs aimed at removing redundancies after major acquisitions are not uncommon, the sheer size of those implemented by Microsoft, as well as the broader trend toward lowering the headcount in the technology sector, raise some concerns when it comes to the health of the industry and the possible impact on future quality and security – and therefore, on future performance.
Another possible weak point for Microsoft – and indeed, for large swaths of the most innovative section of the tech industry – comes in the form of a lawsuit targeting OpenAI for copyright infringement.
OpenAI’s – and MSFT’s by extension – defense largely depends on the well-established yet vague concept of fair use, meaning that the case could go either way. Possibly detrimental to the tech firm’s chances is its own admission that it would be impossible to train useful LLMs without infringing on copyright.
Another threat comes from the results of another AI tool – Midjourney – which sometimes gives alarming results from a copyright standpoint, as highlighted by the fact that multiple sources have confirmed that a relatively vague prompt about a post-apocalyptic setting in which a young girl travels with an older white man returns images strikingly similar to Ellie and Joel from “The Last of Us” franchise.
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