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Some analysts expect Microsoft’s market cap to top $4 trillion before long.
Microsoft won’t be the first company to see its market cap touch $4 trillion—but its shares still have plenty of room to rise, one analyst said.
Oppenheimer cited growth in Microsoft’s (MSFT) AI revenue among its reasons on Wednesday to upgrade the software giant’s shares to a bullish “outperform” rating. It set a $600 price target that is well above Visible Alpha’s average of just over $548 and one of a few that is $5 below the highest one out there.
The target represents about a 20% premium to Tuesday’s close; the shares were recently up nearly 1% to nearly $501, perhaps on track for their first close above $500 apiece. (You can read Investopedia’s full coverage of today’s trading here.) The company’s market cap is around $3.7 trillion today, according to Visible Alpha data.
Growing AI revenue offers “not only valuation support … but also upside potential as this revenue stream continues scaling fast and investors embrace Microsoft as one of the long-term AI winners in software,” Oppenheimer wrote.
The analysts also said Microsoft was one of “only a few vendors in the software industry” capable of a so-called “Rule of 60” profile, a reference to the concept of a company having a combined annual revenue growth rate and EBITDA margin above 60.
That, they said, “lends good support to premium multiples” for Microsoft’s stock.
Microsoft is one of only three companies with a market cap above $3 trillion. Nvidia (NVDA) this morning became the first to top $4 trillion; Wedbush analyst Dan Ives in a note earlier today said he figures Microsoft will get there “this summer.” Apple (AAPL) has a market cap of about $3.1 trillion.
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