Microsoft (NASDAQ:MSFT) attracted attention on Thursday following a forecast from Morgan Stanley suggesting a potential doubling of earnings per share by 2029. This optimistic outlook propelled shares to rise by 0.8% in premarket trading.
Morgan Stanley’s Analysis
In an investor note, analysts led by Keith Weiss emphasized Microsoft’s strong secular positioning, particularly in the Generative AI cycle. They projected a robust earnings per share (EPS) trajectory over the next five years, driven by the company’s leadership in various growth trends.
Key Projections
Morgan Stanley anticipates a 14% compound annual growth rate (CAGR) in revenue and a 16% CAGR in EPS through fiscal year 2029. They forecast Microsoft to achieve an EPS of $24 by fiscal 2029, a significant increase from the expected $11.70 per share in fiscal 2024.
Generative AI Revenue Potential
By fiscal 2029, the firm envisions Microsoft generating up to $120 billion in revenue from generative AI. This revenue stream is expected to stem from the Azure cloud computing unit, a growing contribution from Copilot for Office 365, and modest growth from the More Personal Computing Segment, with additional upside potential from gaming.
Revised Price Target and Rating
In light of these projections, Morgan Stanley raised its price target on Microsoft to $520 from $465 while reiterating an Overweight rating on the stock.
Conclusion
Morgan Stanley’s bullish outlook on Microsoft reflects confidence in the company’s ability to capitalize on emerging technologies and sustain growth momentum over the long term. With a strategic focus on generative AI and a strong market position, Microsoft appears poised for continued success in the evolving digital landscape.
Featured Image: Megapixl @ Wolterk
Author Faith Yakubu 
