Microsoft Stock Forecast 2023 is $288
Microsoft Stock Forecast 2023 for the next 12 months is $288
Latest MSFT Price
Microsoft Stock Forecast 2023: Bull Case
- The expectation of stellar growth from Azure- Azure is the cloud computing wing of Microsoft which has seen some stellar growth in the last few quarters. For example, in the first quarter of 2022, Microsoft reported a 50% increase in Azure revenue, which dropped down to 40% by Q4 2022. In Q1 2023, the results for which were reported on October 25th, Azure revenue was up 35% which is still better than other segments of Microsoft business.
However, with the macroeconomic headwinds easing out in 2023, Azure revenue is expected to shoot up again to mid-50% growth. Also, the Intelligent Cloud segment, which is primarily made up of Azure revenue contributes to around 40% of the company’s revenue in each quarter.
According to Fortune Business Insights, the cloud computing market is expected to see a CAGR of around 17% between 2022 and 2028 and Azure is responsible for 21% of market stock, the second largest after Amazon Web Services, Microsoft is in a big beneficial position to cash in from the growing segment.
- Acquisition of Activision Blizzard – Microsoft sold its first Xbox console in 2001, and since then it has lost every console battle with Sony’s PlayStation. However, the tide is turning soon i.e., the margin between PS5 and Xbox series X/S is narrowing as seen in 2022.
Additionally, Microsoft is using its financial power over Sony to make acquisitions at Xbox Game Studios. The most important deal is a $68.7 billion offer to buy out Activision Blizzard. This deal is expected to close during Microsoft fiscal 2023, ending in June. With this, Microsoft will offer the most comprehensive catalog of gaming. So, instead of selling more consoles, it can enlarge its Xbox users and can hike subscription fees.
Activision Blizzard will give Microsoft a base of 361 million players and help it reach the 1 billion mark. As the gaming industry is shifting from core hardware PC service to subscription service, Microsoft is poised to gain big with its cash power.
- Netflix chose Microsoft for its ad-supported option- Earlier this year, everyone was amazed when Netflix announced a plan to come up with an ad-supported version to boost revenue and make up for lost subscribers. In July 2022, they have chosen Microsoft as an option to go with an ad-supported version.
Google and Comcast were the front runners & Microsoft were like a dark horse. But the argument that Microsoft does not have its streaming service helped them win the battle against the likes of Google and Comcast. They acquired digital ad business Xandr from AT&T in 2021.
After this acquisition, Microsoft can go to any company for digital ad service and can claim that it has capabilities and there is no direct competition also as Microsoft does not has a streaming service of its own.
In 2023, Microsoft can win can crack more such ad revenue deals and can add to its revenue a big amount. Also, the ad industry which has seen a major downfall in 2022, is expected to stand out in 2023.
Also Read: Microsoft Stock Split
Microsoft Stock Forecast 2023: Bear Case
- The bad outlook – Microsoft’s Q1 fiscal 2023 results were a mixed bag. The revenue grew 11% YoY to $50.1 billion and the Intelligent Cloud segment grew 20% to $20.3 billion. However, they were a few concerns that raised the eyebrows of analysts and investors.
First of all, its highest growth segment Azure’s growth story deaccelerated i.e., it grew 50% in FY 2022 Q1, 40% in Q4, and now only 35% in Q1 FY 2023 despite that investors were expecting better numbers from Azure. But more worrisome is the overall growth outlook for Q2 FY 2023. Overall revenue is projected to grow only 2% YoY to $52.85 billion, missing analysts’ Q2 guidance of $56.05 billion by a fair distance.
Furthermore, Azure growth is expected to slow down even more to only the low 30% range. Although, investors can digest ups and down in the Personal Computing segment, but, do not want to see slowing growth in Azure, especially when its peer Alphabet’s Google Cloud saw momentum in recent quarters and is quite bullish going into the final quarter of 2022.
In 2023, If Microsoft reports weak guidance for its Q3 and Q4 for fiscal 2023 ending in June for any reason, it will certainly bring down its stock price as it did by more than 7% on October 26th, 2022.
- De- Growth in Personal Computing segment –Consumer demand has fallen across industries due to the rising cost of living, but the PC market is the one with the hardest hit. According to Gartner, PC shipments fell 19.5% in June- September quarter. When AMD announced a shortfall in revenue in the third quarter of 2022 due to plummeting PC sales, Microsoft stock fell 4.5% in a single day.
In the Q1 fiscal year 2023, Microsoft reported a de-growth of 16% in the Personal Computing segment YoY which constitutes about 30% of the overall revenue of the company. With the recession impending in the first half of 2023, it is expected for more de-growth.
Microsoft Stock Price Prediction for the next 12 months
|Average MSFT Stock Forecast for the next 12 Months||$288|
Microsoft Stock Forecast: Q1 2023 Results
- The revenue of the company decreased from $51.8B (Q4) to $50.12B in Q1 2023. This happened to decrease the YoY growth rate to 10.6% as compared to the last quarter (12.38%).
- The earnings per share stood at 2.35 in Q1 as compared to 2.24 in Q4 with a YoY rate coming down to -13.74% as compared to 2.44% in Q4.
- Revenue in Productivity and Business Processes was $16 billion and increased by 9% as compared to the previous quarter.
- Revenue in Intelligent Cloud was $20.3 billion and increased 20% compared to the previous quarter.
- Revenue in More Personal Computing was $13.3 billion and has taken a slight fall compared to the previous quarter.
- Microsoft has given $9.7 billion to shareholders in the form of share repurchases and dividends in Q1 of 2023, a decrease of 11% compared to the first quarter of the fiscal year 2022.
Microsoft Stock Forecast Today
|1. Market's Wisdom||Partially Negative|
|1a. Market Data||Partially Negative|
|1b. Technical Recommendation||Neutral|
|2. Crowd's Wisdom||Partially Positive|
|2a. Social Media Buzz||Higher|
|2b. Social Media Sentiment||Neutral|
Microsoft Stock Forecast 2023: Conclusion
Is it Safe to Bet on Microsoft in 2023?
To conclude, Microsoft stock has fallen 31% since January 2022. While it has sailed the economic downturns better than its peers, the important question is what 2023 holds for Microsoft stock.
However, it has to be believed that 2023 will be the year for Microsoft due to a couple of reasons. First and foremost is its diversification of business i.e.,it is no longer only a Windows company and its cloud computing segment stands out among others. Its buyout of Activision Blizzard and partnership with Netflix will mark new avenues of revenue in 2023.
Trading at a P/E of 24.85 is not very cheap but it is much below its historical value of the 30s in the last couple of years. Therfore, Microsoft stock will add great value to anybody’s portfolio in the coming year.
Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.