Morgan Stanley raised its price target for Overweight-rated Microsoft (NASDAQ:MSFT) to $520 from $465 per share in a note Thursday, stating that the tech giant's earnings per share could double to $24 by 2029.
The investment bank cited Microsoft's strong positioning for core secular growth drivers in tech, Cloud, and GenAI, combined with its best-in-class operating efficiency, as some of the reasons for its bullish view.
"Microsoft's leadership position for multiple secular growth trends should translate into a 14% revenue CAGR and 16% EPS CAGR through FY29," wrote analysts at Morgan Stanley.
In addition, they believe Microsoft's early leadership position within generative AI should further compound its share gains by an estimated additional 3.5% points over the next three years.
"Our base case forecast shows Generative AI related revenues ramping from $5B in FY24 to $67B in FY29, contributing ~4% points of growth annually," added the bank. "A durable 5-year mid-teens EPS CAGR in a core software franchise should support a 1.8X PEG, inline with peers."