Publication date: May 15, 2025
Microsoft Corporation, a name familiar to many over the past decades. Founded in 1975 by Bill Gates and Paul Allen, this American multinational corporation is globally recognized for its technology products and services and has grown into one of the world's most significant and influential companies. Before delving into the investment opportunities this stock presents, here is a concise introduction to Microsoft:
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Microsoft is globally recognized for its software, including Windows and Office. Since 2014, the company has been under the leadership of CEO Satya Nadella. During his tenure, Microsoft has significantly emphasized cloud computing with Azure and the advancement of artificial intelligence (AI), incorporating AI technologies like OpenAI's GPT-3 into its offerings. Additionally, the company is deeply committed to sustainability, to achieving net-zero emissions by 2030.
Microsoft wields significant influence in both consumer and business technology sectors. Its Windows operating system and Office productivity suite are leaders in the global market. With Azure and LinkedIn, Microsoft has established a strong presence in cloud computing and professional networking. The company's market capitalization is approximately USD 300 billion, with annual sales exceeding USD 240 billion and a net profit of about USD 88 billion in 2024. Microsoft employs 228,000 individuals.
What is the current situation at Microsoft?
Microsoft is currently in a period of strategic restructuring aimed at strengthening its position in artificial intelligence (AI) and improving operational efficiency. The company has announced about 6,000 job cuts, representing about 3% of its global workforce. This decision was made to reduce management layers and make the organization more efficient. The focus is on reducing management roles, while technical positions, such as developer,s are largely retained. Remarkably, even the director of AI, Gabriela de Queiroz, was affected by these layoffs, highlighting the breadth of the restructuring.
Microsoft continues to invest heavily in AI and Cloud technology. Over the next year, 80 billion USD is allocated for capital investment, mainly aimed at expanding data centers that facilitate AI services. This funding is crucial for bolstering infrastructure and fostering growth in the AI sector.
Microsoft Copilot, the AI assistant integrated into products such as Microsoft 365, Windows, and Bing, continues to expand. New features such as Copilot Voice and Copilot Think Deeper, which use OpenAI's o1 model, are now available for free to all Copilot users with unlimited access. In addition, a native Copilot app for macOS has been introduced.
What is the expectation for Microsoft?
Fundamental analysts from leading banks and managers generally hold a positive outlook. They have set an average price target of USD 505, with some even projecting it could reach USD 650 by 2025. Currently, the stock is priced at approximately USD 450. While technical analysts also recommend buying the stock, their optimism is somewhat more reserved compared to the fundamental analysts.
Following the peak in July 2024 at USD 463, the price likely concluded its correction at USD 350 in early April this year. The increase observed over the past month is now interpreted by our algorithm not as a recovery, but as the initial phase of the next upward trend.
Conclusion
Microsoft remains a leading player in the global Technology sector. By diversifying its products and services, the company is effectively adapting to changes. In the near term, a minor correction is possible. When the price is near USD 415 or breaks above USD 465, it may be a good opportunity to add the stock to your portfolio. The projected target price for the end of 2026 is USD 550.
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