By Sam Boughedda
Investing.com — Microsoft Corporation's (NASDAQ:MSFT) acquisition of Activision Blizzard Inc (NASDAQ:ATVI), has many analysts bullish on the deal, with Piper Sandler's Brent Bracelin saying the acquisition combined with Microsoft's gaming and search advertising segments could exceed $40 billion in 2023.
Bracelin, in a note to investors quoted by StreetInsider, added that the deal thrusts Microsoft into the metaverse arms race and has the potential to elevate its footprint in gaming and advertising. Shares of Microsoft rose 2.6% on Wednesday.
"We estimate the ATVI acquisition combined with Microsoft gaming and search advertising segments could exceed $40B+ in CY23 with a 68% and 32% mix split across gaming and advertising, respectively," stated the Piper Sandler analyst.
Bracelin added that a broader consumer reach "gives Microsoft growth optionality across a variety of monetization channels via subscription, in-app purchasing, advertising, and content purchasing."
"Considering the advertising industry is 3-4x larger than the gaming industry, we are equally bullish on the long-term opportunity for share gain potential in advertising and gaming as the Activision Blizzard-King content is repurposed across cloud, mobile, AR/VR, and the metaverse."
Piper Sandler reiterated an overweight rating and $352 price target on Microsoft.
Elsewhere, Morgan Stanley (NYSE:MS) was also bullish on Microsoft following the deal, with analyst Keith Weiss explaining in its client note that Microsoft is "the asset to own in unsettled markets."