Microsoft’s future prospects are looking brighter as it prepares to embark on a significant artificial intelligence (AI) spending spree. According to investment firm Wedbush’s managing director, Dan Ives, this move could boost Microsoft’s valuation by over $350 billion, potentially leading to remarkable growth for the tech giant.
Following an impressive second-quarter earnings report that surpassed Wall Street’s expectations, Ives increased his target for Microsoft’s Big Tech stock from $375 to $400 on Tuesday. Should shares rise by 14% from their current price, the company’s total market capitalization could increase by a staggering $367 billion.
Ives predicted this surge in Microsoft’s stock due to its strategic investments in AI. In a recent research note, he highlighted the “massive golden opportunity ahead” for the company in the AI sector. Microsoft’s early lead in AI is attributed to its investments in OpenAI, the developer of ChatGPT.
During its recent earnings report, Microsoft unveiled its plan to escalate spending on AI. The company’s costs rose in the three months leading up to June 30 as it expanded its data centers to support this push. The news of increased AI investment was well-received by investors, with the stock surging by an impressive 46% before the earnings report. However, it experienced a slight dip of 4% ahead of Wednesday’s opening bell as shareholders considered CEO Satya Nadella’s cautionary note that AI’s earnings boost would be gradual in the coming year.
Microsoft belongs to an elite group of mega-cap tech companies dubbed the “Magnificent Seven.” These companies have witnessed their total valuations skyrocket by trillions of dollars in 2023, with investors showing great interest in AI-related stocks ever since ChatGPT gained immense popularity at the beginning of the year.
Via: Business Insider
