They highlight the tech giant’s growth potential in artificial intelligence.

In the end of April, Microsoft presented more than excellent resultswith increase 17% of profits, a 23% increase in operating profit and a 20% improvement in both net income and earnings per share (EPS) compared to the prior year. Even so, some analysts say the role of big tech companies there is still room to grow and that would be”cheap“, so maybe now is the time to add this Transfer to portfolio.

The idea behind these lines is to find out if the action is valid Microsoft It has the potential to really grow and, if the purchase price is low, have the potential to add the paper to portfolios. All this is in keeping with the company’s core principles, since it is worth remembering that its managers emphasized opportunities in artificial intelligence and cloud revenues, noting that Microsoft Copilot and the Copilot stack They are leading a new era of change in this area.

To understand the potential value Microsoft Need to look at some numbers. The company ended the quarter with $80 billion in cash and short-term investments, more than its $65.4 billion in debt, according to published data. Operating cash flow for the nine months ended March 31 increased to $81.4 billion from $58.8 billion, while free cash flow amounted to $50.7 billion. Thus, the active implementation of artificial intelligence and increased cash flow positions it as one of the best investment options in the current market.

Microsoft and the potential of its actions

Microsoft said it earned $50.6 billion in the nine-month fiscal period. free cash flow (FCF) or free cash flow. This can be seen by subtracting $30.6 billion in capital expenditures from operating cash flow of $81.353 billion for the period.. This huge cash flow represents more than 28% of revenues of $180.395 billion for the 9 fiscal months.

This is a huge supply of housing flow, which few companies can match or even dream of. Moreover, Microsoft consistently delivers such high profits. Therefore, it is useful to forecast future free cash flow. For example, if a company paid out 100% of that free cash flow as dividends, its market valuation would likely end up being a dividend yield of 2%. Thus, dividing $78.7 by 2% gives a projected market capitalization of $3.935 billion.

This represents an increase 26% of Microsoft’s current market cap $3.126 billion. In other words, the company’s shares may cost 26% more than current paper pricebut let’s see what the analysts consulted Volume.

Microsoft Cedear: is it time to buy?

As the investment advisor explains well, Gaston Lentiniin saying this remedy “from a fundamental point of view, “All the big tech companies are creating new alliances, new developments in artificial intelligence and, above all, new profits,” Therefore, such levels compared to the levels at the beginning of the year are unthinkable.

Lentini states that “that’s the beauty of the market“, but warns that if you buy Microsoft today, he recommends “waiting until the price gets above $430, which is the stock’s most recent high.” be able to think accurately about momentum exceeding these values“.

For the analyst when comparing Microsoft with other major technology companies such as GoogleFor example, the situation is very similar. Both in all time record highs or very close and continue to generate before each presentation of balancestop scores. “This is something that surprises all of us, all analysts and many investors,” Lentini says.

From the team Criteria they explain it Microsoft

It is one of the three tech giants that make up the A recommended Ceears portfolio that “proves our thesis”. This is because in the current environment, its price could be influenced by both “short-term” and “long-term” catalysts, since it is a priori one of the companies most likely to “win.”monetizes the impact of increased productivity in the economy thanks to the artificial intelligence revolution“.

In short, this is the context in which the AI ​​boom is motivating a strong push for technology companies in the large-cap and growth sector. which is supported by increased productivitysays the broker’s research team.

$MSFT Potential

And this is not surprising, because, as he points out Damian PalaisFinancial Consultant Coconut Capital, Microsoft is a leading company in the technology sector and “highest rated company in the world“.

Palais says Microsoft this week announced new computers and tablets designed by it, days after Apple, the company led by Steve Jobs. donate your iPads which will go on sale soon. Both companies represent changes from their predecessors, but Microsoft, in Cocos’ vision, shows more attractive improvements in tablet performance as they are mainly focused on tight integration with artificial intelligence.

In this context, the strategist argues that, with regard to Microsoft’s share price, although it is trading at all-time highs, which always raises uncertainty about buying, is that it is the most valuable company in the world, superior to its competitors.. For this reason, a price of US$430 per share can be considered justified. albeit with certain requirements from investorsas their valuations are higher than historical averages, thanks to the latest quarterly results reported, in which, in addition to beating market estimates related to the company’s revenue and earnings, they posted double-digit growth in their core business segments (Microsoft Cloud, Office, Linkedin, Xbox Services).

In addition, Criteria sees value in the artificial intelligence segment of the US market. short-term catalysts as expectations move in lockstep with Federal Reserve decisions and signals., while data on inflation and economic activity is being received. This means that a reduction in the risk-free rate will increase the value of those stocks whose cash flows are expected to be largely distant in time, as is the case with these growth technology companies and large-cap companies such as Microsoft

. “So, the campaign started in May in $389, although the price closed at $429 on Tuesday.“We continue to see value evolving,” he warns.

Finally, given the risks that need to be taken into account when choosing a company like Microsoft to invest in, we must consider the competition of companies in the artificial intelligence sector. Palais points out that the major technology companies (Google, Apple, Amazon, etc.) They are developing their own artificial intelligence systems. and while the company founded by Bill Gates is at the forefront of innovation in this area, Rapid progress across the entire segment poses significant challenges to maintaining its leadership position.