**Microsoft Corp. Could Enter $3 Trillion Club with AI-driven Growth, Says Morgan Stanley**
Artificial intelligence (AI) advancements are poised to drive Microsoft Corp., potentially joining Apple Inc., as one of the few stocks with a market capitalization exceeding $3 trillion. Morgan Stanley analysts believe that Microsoft’s strong position in the software sector, particularly in AI growth, could help propel the company to new heights. They have set a price target of $415 for the tech giant, implying a valuation of around $3.1 trillion.
**Microsoft Identified as Best Placed to Benefit from AI Growth**
Morgan Stanley’s analysts, led by Keith Weiss, have named Microsoft their top pick among large-cap software companies. They assert that Microsoft is well-positioned to capitalize on the expansion of business processes automation through generative AI. Weiss highlighted Microsoft’s ability to monetize this expansion, stating, “Microsoft stands best positioned in software to monetize that expansion.”
**Microsoft Shares Soar as AI Frenzy Boosts Market Interest**
This year, Microsoft shares have experienced a surge in market interest, driven by a general frenzy surrounding all things related to AI. OpenAI Inc., a startup backed by Microsoft, has played a significant role in this excitement, thanks to the viral success of its ChatGPT tool. As a result, Microsoft plans to integrate OpenAI technology into its entire lineup of Office apps, including Excel, PowerPoint, Outlook, and Word.
**Microsoft’s Valuation Remains Attractive**
Despite a 42% increase in its share price this year, Weiss believes that Microsoft’s valuation remains reasonable. He notes that the stock’s price-earnings growth (PEG) ratio, a metric often used by growth-focused investors, remains in line with historical averages. This is remarkable considering Microsoft’s unrivaled positioning in generative AI. Weiss has raised his price target for the stock to $415 from $335, making it the second highest among analysts monitored by Bloomberg.
**Wall Street Bullish on Microsoft’s Potential**
The positive sentiment towards Microsoft’s prospects is shared across Wall Street. Out of 52 analysts, the majority rate the stock as a buy or equivalent. However, only three analysts have price targets indicating a market capitalization of $3 trillion for Microsoft by next year. Bloomberg data confirms that Microsoft’s stock rose 0.9% on Thursday.
**Microsoft Aims to Join Apple in the Trillion-dollar Club**
Last month, Apple made history by becoming the first company to exceed a market value of $3 trillion. With Microsoft’s strong growth potential and its focus on AI-driven innovations, it hopes to join Apple in this exclusive club. Microsoft’s stock has appreciated more than 500% since early 2016, and its trajectory indicates promising possibilities.
In conclusion, Morgan Stanley analysts see Microsoft’s position in the AI sector as a key driver for its potential entry into the elite $3 trillion market capitalization club. With its strategic investments and focus on innovation, Microsoft could solidify its position as a leading player in the tech industry.
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