Source: PaxForex Premium Analytics Portal, Fundamental Insight
Since January 1st, Microsoft's stock has surged by nearly 30%, bolstered by the company's foray into artificial intelligence (AI) - a technology that has the potential to revolutionize numerous industries in the years ahead, and one that has left Wall Street bullish. With established brands like Office, Windows, Azure, and Xbox, Microsoft's stock is already an attractive investment. However, the growing influence of AI has further increased its potential, making it an opportune time to delve deeper into this tech giant. Here are three key things that knowledgeable investors should be aware of.
- AI potential
In 2019, Microsoft invested $1 billion in OpenAI, a move that proved to be a major win for the company. OpenAI's advanced chatbot, ChatGPT, has sparked an AI race among tech giants and prompted Microsoft to invest an additional $10 billion in the company. This partnership has given Microsoft a significant advantage in the market, allowing it to incorporate OpenAI's technology into its own services such as Office, Azure, and Bing. By doing so, Microsoft has positioned itself as the leading provider of AI services for both consumers and businesses.
In addition, Microsoft's cloud computing platform Azure could potentially become the market leader with the help of AI. Richard Bernstein, an investment manager, predicted that Microsoft's cloud revenue could more than double as it expands its AI offerings. According to the first quarter of 2023, Azure currently holds the second-largest cloud market share at 23%, with Amazon Web Services leading at 32%. Nevertheless, Microsoft has the potential to overtake its competitors in the coming years due to its leadership in artificial intelligence.
- Growing dominance in gaming
Strong presence in the gaming industry Apart from its advances in AI and cloud computing, Microsoft has also made significant progress in the gaming industry. Its Xbox brand has propelled the company to become the fourth-largest games company globally, trailing only Tencent, Sony, and Apple. However, Microsoft is making strategic moves to increase its market share in this sector.
The company's game subscription service, Xbox Game Pass, has transformed how millions of gamers consume games since its launch in 2017. By providing users with access to a vast collection of games for a low monthly fee, Game Pass eliminates the need to purchase games individually. Moreover, it adds Microsoft-developed games to the platform from the launch day, which is a significant selling point. As Microsoft acquires more studios, Game Pass has become more attractive to gamers, with hit titles and value-added features that make the Xbox console more appealing than rivals like Sony's PlayStation 5.
Although Microsoft's games business has been impacted by recent macroeconomic challenges, Xbox Game Pass has continued to grow. In Q3 of 2023 (ending March 2023), revenue from the service rose 3% YoY, while the number of Game Pass members grew by 150% from 2020 to 2022.
- Analysts are optimistic about Microsoft's stock
Investors have been drawn to Microsoft this year, with the company's stock increasing nearly 30% since the beginning of 2023, thanks to its expanding venture into artificial intelligence (AI). Microsoft's strong brands like Office, Windows, Azure, and Xbox have already made it a compelling investment, but the company's foray into AI has further boosted its outlook. Smart investors know that Microsoft has significant potential in AI and is leveraging its partnership with OpenAI to integrate the start-up's technology across several of its services, such as Office, Azure, and Bing. In addition to AI, Microsoft has also made significant progress in gaming, with its subscription service Xbox Game Pass growing rapidly and increasing the value of the Xbox console. Analysts have been bullish about Microsoft's potential and have given the company a buy/strong buy rating, with an average 12-month price target projecting a 7% growth in stock. Overall, Microsoft's expanding roles in AI, the cloud market, and gaming make it a long-term buy with considerable potential for growth.
As long as the price is above 292.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 318.42
- Take Profit 1: 330.00
- Take Profit 2: 340.00
Alternative scenario:
If the level of 292.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 292.00
- Take Profit 1: 284.00
- Take Profit 2: 275.00
