Morgan Stanley says Microsoft's EPS can double by 29

The investment bank attributed its positive perspective to a number of factors, including Microsoft's best-in-class operational efficiency and solid positioning for key secular growth drivers in tech, Cloud, and GenAI.

"Microsoft's leadership position for multiple secular growth trends should translate into a 14% revenue CAGR and 16% EPS CAGR through FY29," Morgan Stanley analysts stated.

Furthermore, they think that over the following three years, Microsoft's early leadership in generative AI will further compound its market gains by an extra 3.5% points.

"Our base case forecast shows Generative AI related revenues ramping from $5B in FY24 to $67B in FY29, contributing ~4% points of growth annually," the bank stated. "A durable 5-year mid-teens EPS CAGR in a core software franchise should support a 1.8X PEG, in line with peers."

(Sources: investing.com, reuters.com)