- According to Wedbush, Microsoft’s “game changing” AI products are seeing solid traction among its Azure customers.
- Wedbush raised its Microsoft price target to $425 per share, indicating a potential upside of 15%.
- “We estimate that for every $100 of cloud Azure spend with Microsoft over the last few years, AI spend has grown by $35 to $40,” Wedbush said.
Microsoft’s suite of “game changing” artificial intelligence products is starting to see solid traction among its Azure customers, according to Wedbush analyst Dan Ives.
Ives said Microsoft has seen “increasingly positive” signs for AI demand after conducting channel checks among customers, adding that 2024 will represent a banner year for the roll-out of Microsoft’s co-pilot offerings.
Ives said, “Based on our work in the field we believe that over the next three years over 50% of Microsoft’s installed base will ultimately be on this AI functionality for enterprise/commercial which will change the landscape for Nadella and the company.” Will give.”
This convinced Ives that there was still plenty of upside in Microsoft’s stock, leading Ives to raise his price target from $400 to $425, indicating a potential upside of 15% from current levels. Ives also reiterated his “outperform” rating for Microsoft and said the stock will remain on the Wedbush Best Ideas list through 2024.
“We believe the stock has yet to be priced into what we see as the next wave of cloud and AI growth, which could lead to stronger competitive cloud computing from Amazon and Google in fiscal 2024,” Ives said. “Redmond’s story is coming to a head.”
Ives estimates that Microsoft’s suite of AI products could add about $20 billion to the company’s annual revenue by fiscal year 2025.
“We estimate that for every $100 of cloud Azure spend with MSFT over the last few years, there has been a $35-$40 increase in AI spend for Nadella & Company,” Ives said. “It became very clear to us that the monetization opportunity around deploying AI and ChatGPAT in the cloud is a transformational opportunity across the industry with Redmond in the driver seat.”
The prospect of sustainable AI-driven growth in the coming years underpins Ives’ view that this is a “1995 moment” for the tech sector because of the transformative wave of $1 trillion spending since the introduction of the Internet in the mid-1990s. Has not been seen. In process.