Morgan Stanley on Thursday raised its price target on Microsoft (NASDAQ:) shares with an “outperform” rating to $520 from $465 per share, saying the tech giant’s earnings per share could double to $24 by 2029.
The investment bank cited Microsoft’s strong position across key long-term growth drivers in technology, cloud and genetic artificial intelligence, coupled with best-in-class operational efficiency, as part of the reason for its bullish outlook.
“Microsoft’s leadership position on multiple secular growth trends should result in revenue CAGR of 14% and EPS CAGR of up to 16% through FY29,” Morgan Stanley analysts wrote.
Additionally, they believe Microsoft’s early leadership position in generative artificial intelligence should further fuel its stock’s roughly 3.5% gain over the next three years.
“Our base case forecast shows generative AI-related revenues will grow from $5 billion in FY24 to $67 billion in FY29, driving growth of approximately 4% per annum,” the bank added. “Sustained five-year mid-teens EPS CAGR in the core software franchise should support a PEG of 1.8 times, in line with peers.”