Microsoft: A Recap of Recent Updates

GuruFocus
15 Oct 2024

Microsoft Corp (MSFT, Financial) has a history of generating strong and consistent cash flows and regularly pays dividends to its shareholders. With a stable core business with globally used products Microsoft also offers good growth. It's up to you to decide whether it's a value or growth or both.

Here's some recap of Microsoft updates:

  • Next earnings call: Microsoft's first-quarter financial results of fiscal year 2025 will be released on Wednesday, October 30, 2024 after market close. You can join the live webcast of the earnings call at 2:30 p.m. Pacific Time.
  • Staff offboarding: Sebastien Bubeck, the vice president of Microsoft's generative artificial intelligence research, decided to move to OpenAI. No hard feelings from Microsoft given its close relationship with OpenAI after some investment of more than $13 billion for embedding OpenAI's technology to Microsoft's Bing search engine, Teams video conference tool and Xbox video games.
  • Power deal: Microsoft partners with Constellation Energy (CEG) to reopen the Three Mile Island nuclear power plant in Pennsylvania in 2028. CEG will provide power in the next 20-year after the plan is executed to run Microsoft's AI applications.
  • Xbox Cloud Gaming Launching: For the first time players will be able to access multiple Call of Duty games with Xbox Cloud Gaming anywhere; on consoles, PC, mobile devices, TVs and Meta Quest devices. To support the launch, the company will also release the “Call of Duty: Black Ops 6” game on the same day on October 25, 2024 which can be played on Xbox Cloud Gaming. Not only that, the games “Call of Duty: Modern Warfare III” and “Call of Duty: Warzone” are also made playable in Xbox Cloud Gaming for the Game Pass Ultimate members. Xbox Cloud Gaming servers will also be able to support streaming games that users owned that are not part of the Xbox Game Pass Library.
  • Staff replacement: Craig Duncan will replace Alan Hartman to lead Xbox Game Studios.
  • Partnership: Exela Technologies (XELA) is now partnering with Microsoft Azure to modernize DocDNA's Exela and boost scalability, security, and performance for 250+ Exela's customers.
  • Direct purchase of Xbox games on Android devices: Recent court ruling forced Google to open up its mobile app store to competition so that Microsoft can offer its app store on Android devices and make the Xbox app available on the Google Play Store. That way the players will be able to purchase Xbox games within the Xbox app and bypass the Google Play Store's in-app purchase system and make Xbox games cheaper for the players.
  • AI in healthcare sector: Microsoft now has new artificial intelligence (AI) tools for the healthcare sector to minimize the time spent on record keeping so that nurses don't have to spend 40% of their time on documentation like before.
  • Mental health support: Microsoft Reflect is now integrated into Canvas from Infrastructure (INST) to make mental wellness resources more accessible to all Canvas users and especially for students and educators on World Mental Health Day on October 10.
  • Buy rating with lower target price: Goldman Sachs lowered price target on Microsoft to $500 from $515 as they see Microsoft's artificial intelligence capex estimates in fiscal 2026 and 2027. But they keep the Buy rating as Azure capacity comes online and AI revenue continues to scale.

Based on the one year price targets offered by 46 analysts, the average target price for Microsoft Corp is $495.97 implies an upside of +18.34% from the current price of $419.11.Based on GuruFocus estimates, the estimated GF Value for Microsoft Corp in one year is $474.04, suggesting a upside of +13.11% from the current price of $419.11.

Based on the consensus recommendation from 58 brokerage firms, 34 maintain Microsoft Corp's (MSFT, Financial) status as "Outperform".

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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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