Alexander Koerner
Microsoft (NASDAQ:MSFT) annual sales will increase nearly 12% in 2025 thanks to artificial intelligence, Wedbush said.
Based on recent work in the field, Wedbush predicts that more than 60% of Microsoft's installed base will use ai in the next three years. The use cases range which will be implemented in the next three to six months.
“We believe the stock has yet to price in what we see as the next wave of cloud and ai growth coming to Redmond's story in FY24 with a strong competitive advantage in cloud versus Amazon (AMZN) and Google (GOOG) (GOOGL).”, Dan Ives and his team wrote in a note. “Our recent partner checks have been increasingly strong around Co-Pilot deployments with MSFT clients…we estimate this could add another ~$25 billion to Redmond's top line for FY25” .
Microsoft will report fiscal second-quarter results on Jan. 30 after the close of business. Analyst consensus expects the company to earn $2.76 per share on $61.05 billion in revenue.
Concerns about high valuations and recession fears have Wall Street looking to 2024 guidance and fourth-quarter earnings to gauge demand.
“Our recent on-the-ground tests show an increase in demand around enterprise software, cybersecurity and a clear increase in demand around important ai projects and use cases that will explode by 2024,” the bank said, noting that despite some recent weakness, there is generally less caution on the part of companies.
Microsoft and Nvidia (NVDA) are leading the ai revolution and demand of unprecedented nature is about to explode. The two companies, along with Google, Datadog (DDOG) and Palantir (PLTR) are demonstrating that ai use cases are multiplying across the enterprise and consumer landscape, Ives and his team wrote.
“While bears will continue to worry about tech valuations, we think 24/25 Street numbers (and valuations) will rise as this wave of ai spending hits the tech industry,” the analysts said.
