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Redmond, Washington-based Microsoft Corporation (MSFT) is a key player in the computer industry. The company develops and supports software, services, devices and solutions. With a market cap of $3.1 trillion, Microsoft offers applications, extra cloud storage, and advanced security solutions serving customers worldwide.
Shares of this tech giant have underperformed the broader market over the past year. MSFT has gained 14.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 35.5%. In 2024, MSFT stock is up 12.5%, compared to the SPX’s 25.5% rise on a YTD basis.
Narrowing the focus, MSFT’s underperformance looks less pronounced compared to the Technology Select Sector SPDR Fund (XLK). The exchange-traded fund has gained about 31.6% over the past year. Moreover, the ETF’s 22.7% gains on a YTD basis outshine the stock’s returns over the same time frame.
MSFT is currently experiencing a decline, with its stock price 9.7% below its all-time high of $468.35 in July. This dip was exacerbated by the CrowdStrike outage and conflicting information from its Q1 earnings report. Moreover, the company's recent struggles can be linked to higher capital expenses for AI infrastructure.
On Oct. 30, MSFT shares closed up marginally after reporting its Q1 results. Its EPS of $3.30 topped Wall Street expectations of $3.08. The company’s revenue was $65.6 billion, topping Wall Street forecasts of $64.4 billion.
For the current fiscal year, ending in June 2025, analysts expect MSFT’s EPS to grow 9.7% to $12.94 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 40 analysts covering MSFT stock, the consensus is a “Strong Buy.” That’s based on 34 “Strong Buy” ratings, three “Moderate Buys,” and three “Holds.”
This configuration is less bullish than two months ago, with 36 analysts suggesting a “Strong Buy.”
On Nov. 11, Loop Capital Markets analyst Yun Kim maintained a “Buy” rating on MSFT with a price target of $500, implying a potential upside of 18.2% from current levels.
The mean price target of $504.45 represents a 19.2% premium to MSFT’s current price levels. The Street-high price target of $600 suggests an ambitious upside potential of 41.8%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
