Microsoft’s valuation could surge $350 billion with AI creating a ‘golden opportunity’ for the tech giant, Wedbush says

  • Microsoft shares could jump another 14% thanks to artificial intelligence, according to Wedbush’s Dan Ives.
  • The tech giant’s second-quarter earnings beat expectations, but its stock fell slightly ahead of Wednesday’s opening bell.
  • It has pledged to embark on an AI spending spree, with demand for its services surging.

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Microsoft‘s valuation could be set to rise by over $350 billion thanks to its looming artificial intelligence spending spree, according to Wedbush’s managing director.

Dan Ives upped his target for the Big Tech stock from $375 to $400 Tuesday after it posted a second-quarter earnings report that beat Wall Street’s expectations.

Shares would have to rise 14% from their current price to reach that level, which would add $367 billion to the company’s total market capitalization, by Insider’s calculations.

Ives is bullish on the stock because of its investments in AI, which he called a “massive golden opportunity ahead” for Microsoft in a Tuesday research note.

The Redmond-based tech giant is widely believed to have an early lead in what Ives has previously called the AI “Game of Thrones battle” because of earlier investments it had made in ChatGPT developer OpenAI.

The company laid out a plan to ramp up its spending on the sector Tuesday, and disclosed its costs rose in the three months ending June 30 as it built more data centers to support that push. 

Its shares had jumped 46% prior to the earnings report but dipped 4% ahead of Wednesday’s opening bell, as shareholders assessed CEO Satya Nadella’s warning that AI would only provide a “gradual” earnings boost next year.

Microsoft is one of a small group of mega-cap techs dubbed the “Magnificent Seven” that have seen their total valuations soar by trillions of dollars in 2023, with investors piling into AI-related stocks ever since interest in ChatGPT exploded at the start of the year.

Shares in Google parent Alphabet, another member of that group, jumped 7% in premarket trading Wednesday after it disclosed its own AI spending push, putting it on course to add around $100 billion of market cap.

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George Glover