The firm says Microsoft's AI tailwinds could become as big of a growth driver as its Cloud division.
Piper Sandler is bullish on Microsoft 's AI potential. Analyst Brent Bracelin raised his price target on shares to $400 from $348, saying he was increasing estimates "for an AI All-Star." The new price target implies 20.7% upside from where the stock closed on Tuesday. He also maintained his overweight rating on the stock, noting the company's AI tailwinds have parallels to its large Cloud division.
mountain MSFT in 2023 To be sure, he said that elevated AI investments could result in a "gross margin drag," which he noted could be offset by tighter operating expense management. He lowered his earnings per share forecasts by 5 cents and 7 cents, respectively, for the 2024 and 2025 fiscal years. The analyst added, however, that "AI tailwinds can justify further multiple expansion as AI news flows further converts into higher confidence in out-year growth.
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