24/7 Insights

• Wall Street expectations for where Microsoft Corp. (NASDAQ: MSFT) stock is headed vary.
• However, analysts see more upside potential than downside potential in the coming year.

Everyone has heard of Microsoft Corp. (NASDAQ: MSFT). The tech giant seems ubiquitous. Its best-known products include the Windows line of operating systems, the Microsoft 365 suite of productivity applications, the Azure cloud computing platform, the Edge web browser, and Xbox video game consoles. However, the question for shareholders and would-be investors is where the stock could be headed.

Why Invest in Microsoft?

In the past 20 years, Microsoft stock is up more than 1,517%. The influence of the tech giant has been so pervasive that in the past it has been accused of being a monopoly in the operating system and web browser markets. It remains the world’s largest vendor of computer software, and it has one of the most valuable brands in the world. The stock’s only significant retreat came in 2022, but it has more than recovered, and shares were last seen trading near an all-time high. It is one of the Magnificent 7 stocks driving the market this year.

Microsoft, the Company

The company develops and supports software, services, devices, and solutions worldwide. Its Productivity and Business Processes segment offers SharePoint, Microsoft Teams, Microsoft 365, LinkedIn, and Dynamics 365. The Intelligent Cloud segment offers server products and cloud services, such as Azure, SQL, GitHub, and enterprise services. The More Personal Computing segment offers Windows, Xbox hardware and content, Bing, Microsoft News, and Edge.

Microsoft is based in Redmond, Washington. It was founded in 1975 by Bill Gates, former chief executive and a philanthropist, and his friend Paul Allen. The company went public in 1986. Competitors include Alphabet Inc. (NASDAQ: GOOGL), IBM (NYSE: IBM), Oracle Corp. (NASDAQ: ORCL), and SAP S.E. (NYSE: SAP).

Microsoft recently has announced collaborations for generative AI with Estee Lauder, Coca-Cola, Adobe, and many others. It attributed both second-quarter results and third-quarter results to strength in its cloud business. In May, Microsoft announced a $3.3 billion investment to build an artificial intelligence hub in Wisconsin. Last year, the company announced a new multi-year, multi-billion dollar investment deal with ChatGPT developer OpenAI.This Is How Much Microsoft Is Up Since the Coronavirus Crash

Microsoft, the Stock

The share price is over 36% higher than a year ago, much of that gain coming since the beginning of this year. The Nasdaq is up more than 32% year over year. Note that the share price recently overran the consensus price target.

Out of 34 analysts who cover the stock, 27 recommend buying shares, with 14 of them having Strong Buy ratings. Citigroup and Truist Securities recently maintained their Buy-equivalent ratings. About 73% of shares are held by institutional investors, including notable stakes at Vanguard, BlackRock, and State Street. Note that an executive sold a few hundred shares in June.

Wall Street expectations for where the stock goes in the next 52 weeks vary. While at least one analyst anticipates notable upside, the lowest price target indicates a double-digit percentage drop in the share price. Moreover, the consensus projection is not far off the current share price.

Low target	$403.95	−12.1%
Mean target	$453.03	−1.4%
High target	$555.90	20.9%

Downside risk for the stock includes renewed and increased regulatory pressure and more nimble competitors exploiting tech innovations or nibbling away at Microsoft’s market dominance. It may be hard to imagine those having a huge impact in the next year. On the other hand, a market correction and recession could knock big tech down a peg so that it no longer drives the market.

Though Wall Street’s sentiment on Microsoft stock is mixed, analysts do see a little more upside potential than downside potential.

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