Despite a substantial 42% surge in share price this year, Weiss believes that Microsoft’s valuation remains reasonable. He highlights that the stock’s price-earnings multiple divided by the expected earnings growth (PEG ratio) is in line with historical averages, despite Microsoft’s unrivaled positioning in generative AI. The PEG ratio is a commonly used metric among growth-focused investors.
Weiss has raised his price target to $415 from $335, making it the second highest among analysts tracked by Bloomberg, just behind Redburn’s $450 target. Morgan Stanley has maintained an overweight rating on Microsoft since early 2016, and the stock has gained over 500% during that period.
Nevertheless, Microsoft’s consistent growth and investments in generative AI position it favorably for future success. As Apple made history by exceeding the $3 trillion mark, Microsoft aims to follow suit, driven by the power of generative AI.
