Microsoft Stock (MSFT) Price Forecast 2023: Is MSFT A Good Investment?

2023/01/17By: C, Fiona

 

Microsoft Stock (MSFT) Price Forecast: The outlook for Microsoft stock is positive, as recent trading activity has shown that the MSFT stock price is gaining steam.

Microsoft Stock (MSFT) Price Forecast 2023:The Microsoft share price forecast for the next twelve months is $288.

 

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Microsoft Stock (MSFT) Price Analysis

 

Microsoft stock has been on the rise since hitting a 52-week low of $213.43 on November 3. Microsoft’s 52-week high was $344.3; it is currently significantly below that. But, the recent rally has strengthened the company’s outlook, and Microsoft was once again on track to touch $300; however, after the rate hike by the Fed, Microsoft shares sank below $250.

 

 

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Recently, shares of Microsoft have been trading at a discount to their 50-day Simple Moving Average (red line). The MSFT stock price is not close to dropping below $240, thus this is a very serious warning for investors. As a result of the rate hike, Microsoft’s share price has just dropped below the 200-day moving average (green line) and is currently trading below the 50-day moving average.

 

When investing in MSFT, $238.92 represents the first tier of support. If MSFT were to break below that level, its value may fall to $225 or even lower. The $248.25 price point represents a barrier for Microsoft stock. A few of times Microsoft stock has tested this resistance level, only to retreat. If Microsoft stock (MSFT) manages to break above $250, however, further resistance will be encountered.

 

 

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Increased buying activity is seen in MSFT’s rising RSI. The RSI is at 42.4, but buyers need to clear the 49.96 barrier to advance. After reaching this point of resistance, the RSI turned back. If the RSI index rises over 70, an increase in MSFT share price is anticipated.

 

 

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Microsoft Stock (MSFT) Forecast 2023: Bullish Case

 

  • The anticipated spectacular expansion of Azure– The sky-high hopes for Azure’s future expansion Microsoft’s Azure division, responsible for cloud computing, has experienced rapid expansion in recent quarters. For instance, Microsoft reported a 50% rise in Azure revenue in Q1 2022, but by Q4 2022, that number had plummeted to 40%. While growth in other areas of Microsoft’s business lagged behind Azure in Q1 2023, the company revealed on October 25 that its Azure business had had a 35% increase in sales.

 

Revenue from Azure is forecast to surge to mid-50 percent growth in 2023 as macroeconomic challenges subside. About 40% of quarterly revenue comes from the Intelligent Cloud sector, which is largely comprised of Azure revenue.

The cloud computing industry is projected to develop at a CAGR of roughly 17% between 2022 and 2028, and as Azure accounts for 21% of market stock, making it the second largest behind Amazon Web Services, Microsoft is in a very advantageous position to profit from the expanding segment.

 

  • Obtaining Activision Blizzard– In terms of the purchase of Activision Blizzard, Since the release of the original Xbox console in 2001, Microsoft has consistently been beaten by Sony’s PlayStation. A shift is coming, though; by 2022, the gap between PS5 and Xbox series X/S is expected to have shrunk.

 

When it comes to Xbox Game Studios, Microsoft is utilizing its financial clout to outbid Sony for acquisitions. The most significant transaction is an offer to acquire Activision Blizzard for $68.7 billion. Microsoft’s fiscal year 2023 will end in June, so we plan to close during that time. Microsoft now has the most extensive selection of games available. The company doesn’t need to sell as many Xboxes to generate revenue, as it can instead focus on attracting more paying subscribers.

 

Activision Adding Blizzard’s 361 million gamers will put Microsoft over the billion user threshold. Microsoft stands to reap huge financial rewards from the gaming industry’s impending transition from PC-based core service to subscription service.

 

  • Netflix chose Microsoft for its ad-supported option–supported service because it Early this year, Netflix shocked the industry by announcing that it will develop an ad-supported version in an effort to increase income and compensate for lost members. They’ll be switching to Microsoft’s ad-supported version in July of 2022.

 

Microsoft was more of an underdog, but still in the running, behind heavy favorites Google and Comcast. However, Microsoft was able to defeat competitors like Google and Comcast thanks to the absence of a competing streaming service. In 2021, they purchased Xandr from AT&T, a digital advertising company.

 

Since Microsoft doesn’t offer its own streaming service, it may now approach any firm offering digital advertising services and claim to be capable of doing so.

 

Microsoft has a chance to significantly increase its revenue in 2023 by securing additional advertising arrangements. Another sector predicted to rebound in 2023 is advertising, which suffered a significant decline in 2022.

 

Microsoft Stock (MSFT) Forecast 2023: Bearish Case

 

  • A bleak future awaits – Microsoft’s fiscal first quarter 2023 showed a wide range of results. The overall sales increased by 11% year-over-year to $50.1. Billion, with the Intelligent Cloud subsegment increasing by 20% to $20.3. Billion. However, there were several issues that caused experts and investors to raise eyebrows.

 

To begin, despite investors anticipating stronger results from Azure, the company’s biggest growth sector decelerated, with growth of 50% in Q1 FY 2022, 40% in Q4, and now only 35% in Q1 FY 2023. The overall growth projection for Q2 of FY 2023 is more concerning. Revenue is expected to rise by only 2% year over year, to $52.85 billion, little short of the $56.05 billion predicted by experts for Q2.

 

In addition, Azure expansion is predicted to decelerate even further, to the low 30% range. While investors can handle volatility in the PC market, they would rather not see Azure’s growth slow down, especially since Alphabet’s Google Cloud has been gaining ground in recent quarters and is feeling confident about the fourth quarter of 2022.

Microsoft’s stock price dropped by more than 7% on October 26th, 2022, and would likely drop again in 2023 if the company reported disappointing expectations for its Q3 and Q4 for fiscal 2023 ending in June.

 

  • De-Growth in the PC Market– Consumer demand has dropped across industries due to the rising cost of living, but the PC market has been struck the worst. As reported by Gartner, the shipment of personal computers dropped 19.5% from June to September. Microsoft’s stock dropped 4.5% in one day when AMD reported a revenue deficit in the third quarter of 2022 due to falling PC sales.

 

Microsoft’s Personal Computing division, which contributes roughly 30% of the company’s revenue, saw a YoY decline of 16% in the first quarter of the fiscal year 2023. In the first half of 2023, a recession is forecast, and with it, further de-growth.

 

 

 

 

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Microsoft Stock (MSFT) Forecast 2023 Q1 :

 

  • The company’s revenue fell from $51.8B (Q4) to $50.12B (Q1) in 2023. As a result, the year-over-year growth rate dropped to 10.6% from the prior quarter’s 12.38%.
  • First quarter profits per share were $2.35, up from $2.24 in the previous quarter, for a year-over-year growth rate of -13.74%.
  • The Productivity and Business Processes segment brought in $16 billion in revenue, up 9 percent from the previous quarter.
  • Intelligent Cloud brought in $20.3, up 20% from the prior quarter.
  • More personal computing sales dropped slightly to $13.3 billion from the previous quarter.
  • In the first quarter of fiscal year 2023, Microsoft returned $9.7 billion to shareholders through share repurchases and dividends, down 11% from the first quarter of fiscal year 2022.

 

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Conclusion

 

In sum, Microsoft share prices have dropped 31% since January of 2022. While Microsoft has weathered economic downturns better than its competitors, the future of the company’s stock is uncertain as we approach the year 2023.

 

However, a number of factors suggest that 2023 will be Microsoft’s breakthrough year. One of the most notable changes is that Microsoft is no longer solely a Windows firm; rather, its cloud computing division has emerged as a market leader. In 2023, it will have opened up new revenue streams with the acquisition of Activision Blizzard and its alliance with Netflix.

 

The current P/E of 24.85 is not inexpensive, but it is far lower than the P/Es of the past few years, which were in the high 30s. Therefore, in the coming year, Microsoft stock will be an excellent addition to any investment portfolio.

 

 

 

 

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