Monetization Opportunities Galore: Analyst Predicts Generative AI Will Grow Microsoft Stock

Despite a 1Q rally, software stocks remain challenged by macroeconomic pressures and high levels of uncertainty, with recent regional banking failures adding to collective anxiety levels, Mizuho analyst Gregg Moskowitz notes.
Net, many investors understandably remain cautious about increasing software exposure now.
The analyst's 1Q checks were mixed but reflective of a little more stability than expected for a seasonally weak quarter in a challenging environment.
While markets will likely remain very volatile near-term, the analyst sees several reasons for optimism later this year.
Inflation has been modestly easing, interest rate hikes are moderating, supply chain issues are abating, compares have become much easier, and the USD has recently weakened meaningfully. In addition, LTM EV/Sales valuations are 45% below five-year peak levels and 10% below average.
Net, the analyst finds the overall risk/reward quite attractive over the medium term.
The analyst has less conviction on a near-term basis, where his favorite March-ending stocks to own ahead of the print are Microsoft Corp MSFT and Procore Technologies, Inc PCOR.
The analyst reiterates a Buy rating on Microsoft with a $315 price target.
His checks found mixed results for Azure. Still, for a second consecutive quarter, they were better than public cloud sentiment that remains highly negative, and thus believe a slight upside is doable.
He also believes MSFT's recent innovations leveraging Generative AI have created a higher floor for the shares and sees significant monetization opportunities over time.
Price Action: MSFT shares traded higher by 0.33% at $287.18 on the last check Monday.

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