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Investing.com - Baird initiated coverage on Microsoft (NASDAQ:MSFT) with an Outperform rating and a $600 price target on Friday, representing nearly 20% upside from the current price of $503.29. The tech giant, currently valued at $3.74 trillion, enjoys a strong consensus among analysts with a "Strong Buy" rating.
The research firm highlighted Microsoft’s leadership in the artificial intelligence revolution through both infrastructure and applications, supported by its strategic relationship with OpenAI.
Baird noted that Microsoft provides an end-to-end AI platform serving both enterprise and consumer markets, positioning the company for continued growth. InvestingPro data shows Microsoft maintains robust revenue growth of 15.59% and an overall financial health score rated as "GREAT."
The firm expressed confidence in Microsoft’s ability to maintain double-digit revenue growth at significant scale, which it expects to compare favorably against broader market performance.
Baird acknowledged that while Microsoft stock has performed well year-to-date, it has retreated from recent highs due to concerns about AI capital expenditures and cycle timing, but the firm remains positive on both the company’s near-term and long-term outlook. According to InvestingPro, Microsoft appears slightly undervalued based on its Fair Value estimate, with 26 analysts recently revising earnings upward. For comprehensive analysis, check out the Pro Research Report available for Microsoft and 1,400+ top US stocks.
In other recent news, Microsoft has announced significant developments in its data center and artificial intelligence initiatives. The company is unveiling a new AI "super factory" in Atlanta, part of its plan to double its data center footprint within the next two years. This facility, part of the Fairwater network, will house extensive Nvidia graphics processing units and feature high-speed connections to other AI hubs. Additionally, Microsoft and Abu Dhabi’s G42 have disclosed a 200-megawatt data center expansion in the UAE, expected to commence operations by the end of 2026. This expansion is part of Microsoft’s broader $15 billion investment in the Gulf region.
Furthermore, Microsoft has committed over $60 billion to neocloud data centers to meet its AI computing demands, with $23 billion allocated to British startup Nscale. In another development, Microsoft plans to leverage OpenAI’s custom AI semiconductor designs to enhance its own chip initiatives. Meanwhile, the Anti-Defamation League and JLens have urged Microsoft shareholders to vote against Proposal 9 at the upcoming annual meeting, which concerns the assessment of potential human rights implications of Microsoft’s services. These recent developments highlight Microsoft’s strategic moves in AI and data center expansion.
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