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Microsoft Corporation (MSFT), headquartered in Redmond, Washington, is synonymous with productivity software, services, and solutions worldwide. Valued at $3.09 trillion by market cap, the company is the world’s most valuable company and dominates the PC software market with more than 80% of the market share in operating systems. MSFT’s Azure is the second-largest public cloud platform in the world and provides companies with the ability to train their own AI models.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and MSFT definitely fits that description. The tech giant has taken rapid strides in the fast-growing generative AI market, integrating it into its search and across its suite of productivity software.
However, the tech titan has fallen 4.3% from its 52-week high of $433.60, which it hit on May 23. Shares of MSFT are up 0.4% over the past three months, underperforming the broader S&P 500 Index’s ($SPX) 3.6% gains over the same time frame.
Longer term, MSFT shares rose 24.7% over the past year, and in 2024, the stock is up 10.4%. By contrast, the SPX is up 10.6% on a YTD basis and 25.5% over the past 52 weeks.
To confirm the bullish price trend, MSFT has been trading above its 200-day moving average over the past year.
MSFT’s strong run over the past year can be attributed to the optimism around AI. The company was amongst the first movers in this space with its $1 billion investment in OpenAI, which it later increased to nearly $13 billion, thus enabling it exclusive access to cutting-edge AI models. Thanks to AI, the company was able to increase its Intelligent cloud revenue by 21% year-over-year during Q3. The company is also introducing AI features to other products, such as a generative AI assistant called Copilot to Microsoft 365, and integrated parts of ChatGPT into its search engine Bing.
To emphasize the stock’s outperformance, top rival Apple Inc. (AAPL) has underperformed – not just MSFT but also the broader equity benchmarks. AAPL stock has gained 9.6% in the past 52 weeks and is down marginally on a YTD basis.
Despite its recent underperformance compared to the SPX, analysts are optimistic about MSFT’s prospects. The stock has a consensus rating of “Strong Buy” from the 37 analysts covering it, and the mean price target of $485.29 is a premium of 16.9% to current levels.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
