Microsoft Gets Price Target Boost As Analyst Bets On ChatGPT As 'Next Leg Of Growth Stool'

A Microsoft Corp. MSFT analyst said Thursday he is "more bullish" on the prospects for the company.

The Microsoft Analyst: Wedbush analyst Daniel Ives maintained an Outperform rating for the shares and raised the price target from $325 to $340.

The stock also remains in Webush's "Best Ideas List," the analyst said.

The Microsoft Thesis: Monetization opportunities around deploying AI and ChatGPT in the cloud is a transformational opportunity across the industry, with Microsoft in the driver's seat, said analyst Ives in a note. The analyst based the deduction on checks with Microsoft customers and partners as well as his field checks.

"We believe that Microsoft is in a unique position to gain share in the cloud market while deploying additional AI capabilities," the analyst said. He estimates that this could expand the company's total addressable market around the cloud by 35%-40% over the coming years.

"In this Game of Thrones Battle for AI market share we view the enterprise as the golden goose opportunity as we estimate the AI market opportunity is an $800 billion market over the next decade," Ives said.

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The analyst expects others such as Alphabet, Inc. GOOGL GOOG, Oracle Corp. ORCL, Salesforce, Inc. CRM and IBM Corp. IBM, to benefit as well.

"ChatGPT will be the next leg of the growth stool for MSFT," the analyst said. He expects the cloud and underlying Office 365/Windows ecosystem to make up a bigger and bigger piece of the company going forward. This will ultimately spur growth and margins into fiscal years 2023 and 2024 despite this downturn, he said.

ChatGPT/AI monetization on both the consumer and enterprise fronts combined will likely add $25-$30 per share to the company's valuation, he added.

Price Action: In premarket trading, Microsoft shares slipped 0.36% to $311.20, according to Benzinga Pro data.

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