While Microsoft is bullish on Copilot, Salesforce CEO Marc Benioff believes the company has simply repackaged ChatGPT, disappointing its customers. Salesforce is a rival of Microsoft, so criticisms from its management need to be taken with a grain of salt. But there are other worrying signs, such as lackluster personal computer sales despite the launch of new AI-powered computers from Microsoft. Plus, Microsoft delayed the launch of its AI chip, Maia, by at least six months, offering further proof that its AI strategy isn’t going exactly according to plan. Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
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With a forward price-to-earnings (P/E) ratio of 31, Microsoft is expensive by most standards. That’s no real surprise, though; premium companies often command premium prices. The investment performance of MSFT shares has been very rewarding for shareholders. Microsoft achieved a remarkable stock rise, exceeding 50% during 2023 and outperforming numerous other market competitors.
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Microsoft’s AI products command 42% higher ASPs than standard offerings with 3.8x faster adoption rates. Quantitatively, AI services should deliver 38% of Microsoft’s projected earnings growth through 2027, potentially adding $35-40 billion in annual revenue at 65-70% margins — the highest-quality growth in Microsoft’s product portfolio. For long-term investors, Microsoft represents a foundational technology holding that balances above-market growth potential with below-sector volatility – delivering a 0.91 beta despite its high-growth profile. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors.
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Microsoft controls significant leadership positions in cloud computing, software solutions, and AI is microsoft a good stock to buy capabilities. In 2023, Microsoft generated $232 billion in revenue, a 10% increase over the prior year. Microsoft (MSFT 0.97%) has routinely been one of the most valuable companies in the world.
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Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks. If the AI market stalls or fails to provide a rapid return, these investments could damage earnings. The chart above points toward an increase of 14% and 17% in Microsoft’s earnings over the next two fiscal years. That’s why it may be a good idea to buy this stock following its recent pullback, as it is trading at 33 times earnings right now, which is in line with the tech-laden Nasdaq-100 index’s earnings multiple. However, keep in mind that some investors are concerned that Microsoft’s stock price has risen rapidly, leading to a potentially expensive valuation. GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information.
The question “is MSFT a good stock to buy” requires personalized analysis based on portfolio allocation strategy, investment timeframe, and risk parameters. Microsoft’s valuation premium of 26.1% above sector averages reflects quality metrics including 33.4% ROIC (12.1 points above tech sector median), 16.8% revenue growth at $200B+ scale, and financial flexibility from $49.1B net cash. Current price levels represent fair value rather than deep value opportunity, suggesting position building on technical pullbacks or through systematic accumulation rather than lump-sum investment. For optimal risk-adjusted returns, implement a systematic accumulation strategy rather than timing-based approaches. Establish biweekly or monthly purchase schedules allocating 2-4% of investment capital per transaction, with accelerated purchasing (2x normal allocation) during 10%+ market corrections.
Tech giant Microsoft (MSFT) is scheduled to report its fiscal fourth‑quarter earnings on July 30, after the market closes. Analysts expect the company to earn $3.38 per share, which would be an increase of 14% year-over-year. Furthermore, revenue is projected to come in at $73.8 billion compared to the prior year’s $64.7 billion. Investors using Pocket Option’s portfolio analytics can implement precise position sizing based on volatility metrics, employ cost-averaging strategies during price corrections, or utilize options-based hedging to manage these identified risk factors. As an investor, it’s your job to determine if the premium price is worth paying.
Microsoft trades at a 26.1% premium to tech sector averages with a forward P/E of 37.2x versus the S&P 500’s 22.1x. This premium is justified by Microsoft’s industry-leading 38.7% profit margins, consistent revenue growth of 16.8% despite its $200B+ scale, and 33.4% return on invested capital. DCF analysis indicates a fair value range of $ , suggesting current pricing ($400) represents full valuation rather than excessive premium.
The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities. Earlier this month, Microsoft said it’ll lay off roughly 9,000 employees, approximately 4 percent of its total headcount. This is all part of an internal restructuring to pivot resources to AI, but news like this can concern investors about near-term cost headwinds. Microsoft has invested roughly $80 billion to construct additional data centers for AI.
- The direction of a stock’s earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.
- Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 30 Buys and three Holds assigned in the last three months.
- Microsoft consistently puts up good financial numbers, and its latest quarter was no different.
- Microsoft’s valuation premium of 26.1% above sector averages reflects quality metrics including 33.4% ROIC (12.1 points above tech sector median), 16.8% revenue growth at $200B+ scale, and financial flexibility from $49.1B net cash.
It also has personal computers with AI capabilities, which may be yet another tremendous growth opportunity for the business. The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum. There is a lot of volatile success feeding the current price, so there’s always room for a short-term dip or consolidation. Long-term investors may still view this as a fine entry point if they’re willing to weather the fluctuation.
- This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.
- But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
- Some analysts believe that Microsoft’s strong position in the PC market, its dominance in the operating system industry and its general continued innovation in AI make it a compelling long-term investment for at least the next couple of years.
- Plus, Microsoft delayed the launch of its AI chip, Maia, by at least six months, offering further proof that its AI strategy isn’t going exactly according to plan.
- The company dominates the PC software market with more than 73% of the market share for desktop operating systems.
For fiscal 2026, 10 analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.18 to $15.53 per share. The stock is trading well above critical moving averages (such as the 50-day and 200-day), which is a sign of strong bullish momentum. Day traders might see this as a show of muscles, but it indicates the stock could be a bit “overbought” in the short term. Microsoft stock has risen nearly 29% since the start of the year, but shares have been treading water since jumping to a record high after its July earnings report. Economic uncertainty weighed on shares throughout the first few months of the year before a string of trade deals and optimism about artificial intelligence helped lift shares into the summer.
Microsoft (MSFT) is scheduled to report quarterly results after markets close on Wednesday, and some investors expect the stock to jump to a fresh record. Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a 4.1% move in either direction. Unfortunately, for investors looking for an undervalued gem, Microsoft doesn’t fit that definition.
Our examination focuses on Microsoft’s performance metrics alongside its business expansion prospects and current market standing. A stock trading at a high valuation means that investors will have high expectations for future growth. And if that doesn’t end up being the case, it could lead to a correction. For now, investors appear to be content with the stock’s growth rate of around 18%, but it wasn’t all that long ago that it was in the low-single digits.
Customize your newsfeed with content you’re actually interested in — get up-to-date personalized newsletter in your inbox. Sign up for our daily newsletter for the latest financial news and trending topics. Investors weren’t too pleased with slowing cloud growth, but help could be on the way.
Its popular office software is used in businesses across the globe, and it has been expanding into other industries via acquisitions, such as gaming. That expanded the company’s tentacles and growth opportunities, attracting more growth investors in the stock along the way. Microsoft Corporation is one of the largest broad-based technology providers in the world. The company dominates the PC software market with more than 73% of the market share for desktop operating systems. Value investors love finding good stocks at good prices, especially before the broader market catches on to a stock’s true value.
Its earnings per share (EPS) came in at $2.95, beating analysts’ estimates. Microsoft predicts future revenue growth will increase because their products now feature AI integration. Microsoft stands to gain from the projected $1.8 trillion value expansion of the AI market until 2030. The tech stocks industry is changing due to the emergence of Artificial Intelligence (AI). Microsoft made significant financial investments in AI through its collaboration with OpenAI. This strategic move helps the company position itself better within the intense AI market.