Microsoft (MSFT) stock forecast and price prediction

Key points

• Microsoft possesses diverse revenue streams.
• The company demonstrates growing revenue and profitability year after year.
• MSFT consistently outperforms the S&P 500.

Microsoft has been publicly traded for almost 40 years. Its stock has risen consistently, reaching a $1 trillion market cap in 2019. Today, the tech giant has a market cap of more than $3 trillion.

Here’s what you need to know about MSFT stock.

Microsoft stock price

Microsoft is one of the original tech giants. Its stock has had decades to weather various storms.

Take the turn of the 21st century, for example. On a split-adjusted basis, MSFT climbed as high as $59.97 in December 1999 during the dot-com bubble. But it dropped as low as $14.87 in 2009 during the Great Recession. It took the stock nearly 17 years to return to its dot-com bubble highs in October 2016.

Since then, it has been on a tear. Shares reached nearly $350 in late 2021. The 2022 tech sector sell-off dropped the stock price to under $215. It rallied in 2023, hitting above $384 per share in November. The climb continued in 2024, with MSFT reaching a split-adjusted high of $446.50 on June 17, 2024.

What is Microsoft’s target price?

The average target among 58 Wall Street analysts covering MSFT is $485.82.

How has the Microsoft stock price performed?

MSFT has performed very well since its 1986 initial public offering.

Over the past 20 years ending June 13, Microsoft shares have generated returns of more than 1,400%.

Microsoft earnings

Microsoft has increased its earnings over time. For fiscal 2023, revenue was $211.9 billion, up 7% from the previous year. Net income was $73.3 billion, a 6% increase. Gross margin increased $10.4 billion, or roughly 8%.

Research and development costs also increased by over $2.6 billion. Operating expenses increased by $5.3 billion, or 10%. Microsoft cited factors such as employee severance packages, acquisitions, investments in cloud engineering and LinkedIn.

Microsoft maintains a consistent net profit, with margins above 35% in the past four quarters. After seeing a decline in its cash and cash equivalents in 2021 and 2022, those figures increased in 2023.

Microsoft at a glance

In its early days, Microsoft focused on developing an operating system for IBM. The system, MS-DOS, was released in 1981 with IBM’s first personal computer. By the early 1990s, Microsoft had sold over 100 million copies of MS-DOS. It released its groundbreaking Windows operating system in 1985. But Windows didn’t gain traction until the 1990s.

Over the next 20 years, the company focused on shifting its business to a subscription model. It invested in its cloud services segment and expanded its presence in the gaming market.

Microsoft acquired the video collaboration application Skype in 2011. In 2016, it added LinkedIn to its portfolio. In 2020, the company bought game developer and publisher ZeniMax. It acquired cloud and artificial intelligence software company Nuance Communications the following year. In 2022, it bought Activision Blizzard, maker of “Call of Duty” and “World of Warcraft.”

The tech giant made a big splash in the AI world in 2019 when it invested $1 billion in ChatGPT maker OpenAI. That same year, it secured a deal with OpenAI to build Azure AI technologies. Microsoft announced another $10 billion investment in OpenAI in January 2023. About a month later, it integrated OpenAI technology into its Bing search engine.

Microsoft controversies

Microsoft has been the subject of several controversies. In the late 1990s, the Department of Justice brought an antitrust lawsuit against the company. It alleged that Microsoft held monopoly power, citing its dominant PC market share and a high barrier to entry. As a result, customers lacked viable alternatives to Windows. The two parties later reached a settlement that restricted Microsoft’s conduct.

Microsoft has been criticized for its labor practices. In 2000, it paid $97 million to settle a lawsuit brought by temporary workers denied benefits.

The tech giant has also been accused of using its complex corporate structure to avoid paying taxes.

Microsoft is the subject of the largest audit in IRS history. The agency says the company owes $28.9 billion in back taxes, plus penalties and interest. Microsoft disputes that figure.

Microsoft IPO

With an initial public offering in 1986, MSFT was priced at $21 per share. The company netted a valuation of $777 million. Before the close of the first trading day, shares reached $35.50. About 2.5 million shares were sold that day, raising $61 million.

During the IPO, co-founder Bill Gates, then 30 years old, sold $1.6 million in shares. He retained a 45% stake worth $350 million.

Purchasing MSFT during its IPO was one of the best investments of the 1990s. At the height of the dot-com bubble in 2000, its market cap reached nearly $600 billion.

Microsoft stock splits

The company’s most recent stock split was a 2-for-1 split in February 2003. The stock has split nine times. Today, a single share of Microsoft’s IPO stock represents 288 shares.

Microsoft stock split history

Opportunities and obstacles facing Microsoft

Microsoft is well positioned to continue outperforming. But it faces several potential stumbling blocks.

Public cloud computing is one of the largest growth markets in the tech world. Microsoft’s Azure is a leading provider in that market. The Microsoft 365 productivity software suite creates upselling opportunities and tremendous cash flow. This can help the company invest in Azure and other growth initiatives. A ChatGPT service is now on the market as ChatGPT Azure OpenAI Service. Microsoft’s relationship with OpenAI could give it a first-mover advantage in AI technology.

Unfortunately, Microsoft Office is a mature product and likely has limited growth opportunities. The company also faces competition for cloud services from other tech companies, such as Amazon.com (AMZN) and Alphabet (GOOG).

Developing AI technology is expensive. But Microsoft risks falling behind Google’s Gemini and other AI leaders if it doesn’t stay on the cutting edge of development.

Strengths

• Microsoft is a market leader in the high-growth enterprise cloud services business.
• The company’s diversified portfolio of professional software applications creates upselling opportunities.
• Microsoft has a relationship with OpenAI and is an early market leader in ChatGPT AI technology.

Weaknesses

• Microsoft Office is a mature product with limited growth opportunities.
• The company faces stiff competition from Amazon, Google and others for cloud services.
• The PC market is relatively stagnant, which may limit growth potential for Windows and related products.

Nasdaq: Microsoft comparison

MSFT is one of the top stocks in the Nasdaq composite index, with a weight of 11.78% as of March 28, 2024.

The table below orders the 10 stocks with the greatest weighting in the Nasdaq by market cap. It’s reordered daily at market close.

Microsoft stock forecast 2024

Analysts are generally optimistic about Microsoft's business and stock price in 2024. The analysts covering MSFT project full-year adjusted earnings per share of $11.80 in fiscal 2024.

Microsoft's fiscal 2024 already looks rosy. The company reported 20% net income growth in its fiscal third quarter. Revenue was $61.9 billion, increasing by 17%.

Microsoft stock forecast 2025

Microsoft’s revenue is expected to grow in 2025, with an average estimated $280.03 billion. That represents about a 14.3% increase from the 2024 estimate. Earnings are also expected to grow, with an estimated $13.27 per share in 2025.

What can we expect in the coming years?

AI technology is the biggest wild card for Microsoft investors in the next several years. The company is off to a strong start with its initial wave of AI product launches and investment in OpenAI.

Investors should monitor how the company integrates Activision Blizzard into its gaming business and its long-term strategy for the gaming segment.

Frequently asked questions (FAQs)

Is Microsoft stock a good buy?

The average target among Wall Street analysts covering MSFT is $485.82. Of 58 analysts, 47 have a “buy” rating and 3 have a “hold” rating.

What is the highest that Microsoft stock has ever been?

As of this writing, the highest stock price recorded for MSFT was an intraday high of $446.50 on June 17, 2024.

When did Microsoft stock split?

Microsoft has split its stock nine times The first split was on Sept. 18, 1987, and the most recent was on Feb. 14, 2003. Most splits have been 2-for-1. But the company had 3-for-2 splits in 1991 and 1992.

Does Microsoft stock pay dividends?

Microsoft stock pays a quarterly dividend with a yield of 0.7%.