How to Trade Microsoft Ahead of the AI Revolution

Microsoft is the second largest company in the world, continuously delivering impressive results and once again exceeding market expectations in the most recent quarter. Despite Microsoft’s already enormous size, its emergence as a leading player in the AI revolution has resulted in many observers feeling increasingly bullish about its future growth.

Keep reading to find out more about Microsoft’s latest results and what analysts are forecasting for the stock.

• The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.

All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose, as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing. 

Microsoft Q4 2023 Performance

Here are some of the key highlights from Microsoft’s latest fourth quarter fiscal 2023 results:

• Earnings per share of $2.69 vs $2.55 expected, an increase of 21% year on year (YoY).
• Revenue of $56.19 billion vs $55.44 billion expected, an increase of 8% YoY.
• Operating income of $24.3 billion, an increase of 18% YoY.
• Microsoft Cloud revenue of $30.3 billion, an increase of 21% YoY.

Strong growth from cloud services offset an ongoing slump in Microsoft’s More Personal Computing division, resulting in Microsoft beating expectations in the final quarter of fiscal-year 2023.

Microsoft Azure is second only to Amazon Web Services in the rapidly growing cloud computing market and, as evidenced by the latest results, has become a key source of revenue for the tech company.

As with many technology stocks, Microsoft had a year to forget in the stock market in 2022, with share price tumbling more than 28%. However, as confidence has returned to the market, Microsoft shares have surged more than 35% so far in 2023, hitting an all-time high in the process.

Besides improving investor sentiment, a significantly superior financial performance in the second half of fiscal-year 2023 helped push Microsoft’s share price up. However, another key factor has come from bullish sentiment amongst investors about the future of Artificial Intelligence (AI), an industry in which Microsoft finds itself well-positioned.

Microsoft is the largest investor in OpenAI, the company which developed ChatGPT, and it is working towards integrating AI into many of its products. Indeed, Microsoft’s search engine, Bing, has already launched an AI-powered chat that runs alongside its traditional search function.

Moreover, plans have been announced for Microsoft 365 Copilot, which will see Microsoft integrate next-generation AI into its traditional suite of Office products for a monthly fee of $30. That could end up being a significant source of revenue for the company.

Nevertheless, a rising cost of living and slowing economic growth in many of Microsoft’s key markets may result in a drop in earnings in the near future. Indeed, the effects of this can already be observed by a decline in Microsoft’s gaming and PC revenue. But what do the analysts think?

Microsoft Stock Forecast - What do the Analysts Say?

According to analysts polled by TipRanks for a Microsoft stock forecast in the past 3 months, there are currently 32 buy, 2 hold and 1 sell ratings on the stock. The highest price level for a Microsoft stock forecast is $440.00 with the lowest price target at $232.00. 

The average price target for a Microsoft stock forecast is $391.52.

An Example Trading Idea for the Microsoft Share Price

An example trading idea for the Microsoft share price could be as follows:  

• Buy the stock on a break above $360.00 to allow for volatility. 
• Target just below the average analyst price target at $391.00. 
• Keep your risk small at a maximum of 5% of your total account.   
• Time Line = 6 – 12 months  
• If you buy 10 Microsoft shares:  
• If target is reached = $310.00 potential profit [($391.00 - $360.00) * 10 shares].

Remember that markets go up and down and the share price is unlikely to move up in a straight line. In fact, it may even go much further down before it rises, if it rises at all.

Be sure to exercise good risk management and always know how much you could potentially lose on a trade, the risks involved and the costs.

With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. That means buying 10 Microsoft shares would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.

However, there is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall! 

How to Buy Microsoft Shares in 4 Steps  

With Admirals, you can buy shares in thousands of companies like Microsoft with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks. 

• Open an account with Admirals to access the Dashboard.   
• Click Invest on one of your live or demo accounts to open the MetaTrader web terminal.   
• Search for Microsoft stock in the search window at the top right to view the price chart. 
• Click Create New Order at the bottom of the screen, enter the number of Microsoft shares you wish to purchase and click ‘Buy’ to send your order to the market!

Click on the banner below to trade Microsoft stock today! ▼▼▼ 

Do You See the Microsoft Stock Price Moving Differently?   

This means you can trade long and short to potentially profit from rising and falling stock prices.

Remember that all analytics and trading ideas are based on the personal view and experience of the author.  

If you believe there is a higher chance the Microsoft share price will move lower, then you can choose to trade short using a CFD (Contracts for Difference) trading account which Admirals also provide.  

The Trade.MT5 and Trade.MT4 accounts allow you to speculate on the price direction of stocks and shares using CFDs.  

This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this article: How to Trade CFDs.

INFORMATION ABOUT ANALYTICAL MATERIALS:

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:

• This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
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• The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
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