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Investing.com - Morgan Stanley raised its price target on Microsoft (NASDAQ:MSFT) to $625.00 from $582.00 on Friday, while maintaining an Overweight rating on the stock. Microsoft, currently trading at $507.03 with a market capitalization of $3.77 trillion, shows strong financial health according to InvestingPro metrics.
The investment bank named Microsoft its "Top Pick" in large-cap software, citing the company’s "clearest and highest probability positive risk/reward in the space."
Morgan Stanley highlighted Microsoft’s strong positioning across multiple growth areas, including generative AI, enterprise cloud migration, and cybersecurity, where the firm noted Microsoft is "the largest vendor in the space with >$40 billion in revenues."
The bank’s analysis suggests Microsoft’s growth profile is "under-appreciated," pointing to the stock’s current valuation at less than 26x GAAP CY27 EPS multiple compared to the large-cap software average of 32x non-GAAP EPS.
Morgan Stanley expects Microsoft shares to benefit from "sustained momentum on the top-line, better appreciation of the breadth of growth drivers and resolution of uncertainty around the OpenAI relationship."
In other recent news, Microsoft announced a price increase for its Xbox Series S and Series X video game consoles effective October 3, due to changes in the macroeconomic environment. The Xbox Series S models will see a $20 increase, while the Xbox Series X will rise by $50. Additionally, the premium Xbox Series X with 2 terabytes of storage will experience a $70 hike. Meanwhile, Microsoft is expanding its artificial intelligence capabilities by integrating Anthropic AI models into its Copilot assistant, allowing business users to switch between OpenAI and Anthropic models for various functions. The company also unveiled a unified platform called "Microsoft Marketplace," consolidating its separate AI marketplaces into a single offering for businesses. Furthermore, Microsoft is constructing what it claims to be the world’s most powerful AI datacenter in southeastern Wisconsin, equipped with a vast network of NVIDIA GB200s. In related developments, OpenAI launched ChatGPT Pulse, a feature providing personalized updates to Pro users, with plans to expand access in the future.
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