Could Microsoft Stock Reach $1,000? | MSFT Stock Prediction | MSFT Stock Analysis

Summary

This video explores the potential for Microsoft's stock to reach $1,000 per share by 2030, analyzing current performance and future growth prospects. With a current price of $418, the video considers factors like AI integration and PC replacement cycles, projecting earnings per share growth and applying different PE ratios to estimate future stock prices. The most likely scenario predicts a price between $900 and $1,050, emphasizing the importance of continued earnings growth and the inherent uncertainties in such predictions.

Takeaways

• 📈 The video discusses the potential for Microsoft's stock to reach $1,000 per share by 2030, offering different scenarios based on various growth rates and valuations.
• 💹 Microsoft's current stock price is $418 per share, having performed well after a low point around $230 per share in early 2023.
• 🔍 Microsoft was an early investor in OpenAI and is integrating AI technologies like Chat GPT into its cloud services and products, which is boosting its share price.
• 👨‍💼 Analysts expect Microsoft to deliver $13.37 in earnings per share in 2025, up from $11.65 in 2024, showing optimism about the company's earnings prospects.
• 📊 Wall Street analysts project an average annual earnings per share growth of 16.3% for Microsoft over the next five years, beyond the growth expected until 2025.
• 💡 The video highlights the potential benefits Microsoft could gain from the rising effectiveness of AI and the replacement cycle of personal computers purchased during the pandemic.
• 📚 The replacement cycle for PCs is expected to start in 2024 and peak in 2025 and 2026, which positions Microsoft to capitalize on the demand for newer AI-infused computers.
• 🔢 Using a 16% growth rate on the expected earnings per share, the video projects a 2031 earnings per share forecast of $338, which could lead to a stock price of $1,388 in 2030 with the current valuation.
• 📉 If valuations decrease, the stock price could be lower, with scenarios ranging from $928 per share at a 28 PE ratio to $661 per share at a 20 PE ratio.
• 📈 The video suggests that as long as Microsoft's earnings per share grow by at least 6%, the stock price is likely to increase in the next six years.
• 🎯 The most likely scenario presented is that Microsoft's stock price could be around the midpoint of $1,000 per share by 2030, but this is subject to change based on various factors and assumptions.

Q & A

What is the main topic of the video?

The main topic of the video is to analyze Microsoft stock and predict whether it could reach $1,000 per share by the year 2030.

What is the current stock price of Microsoft according to the video?

The current stock price of Microsoft is $418 per share.

What was the lowest stock price of Microsoft in 2023?

The lowest stock price of Microsoft in 2023 was around $230 per share.

How has Microsoft's investment in OpenAI impacted its stock price?

Microsoft's investment in OpenAI and the incorporation of OpenAI's chat GPT into its cloud services and products has provided a huge boost to Microsoft and its share price in recent months.

What is the expected earnings per share (EPS) for Microsoft in 2025 according to Wall Street analysts?

Wall Street analysts expect Microsoft to deliver $13.37 in earnings per share in 2025.

What is the projected compound annual growth rate (CAGR) for Microsoft's earnings per share over the next 5 years?

The projected CAGR for Microsoft's earnings per share over the next 5 years is 16.3%.

What is the potential impact of the personal computer replacement cycle on Microsoft's stock price?

The personal computer replacement cycle, starting in 2024 and peaking in 2025 and 2026, could significantly benefit Microsoft as older computers purchased in 2020 and 2021 are replaced with newer AI-infused models.

What is the highest stock price forecast for Microsoft in 2030 if all goes well according to the video?

If all goes well and maintains the current trajectory, Microsoft's stock price could reach $1,388 by 2030.

What could be a scenario where Microsoft's stock price does not increase significantly by 2030?

A scenario where Microsoft's stock price does not increase significantly would be if its earnings per share growth rate comes in significantly below the current expectation.

What is the video creator's most likely prediction for Microsoft's stock price by 2030?

The video creator predicts that Microsoft's stock price will most likely be between $1,900 and $1,050 per share by 2030, with a midpoint of $1,000 per share.

What disclaimer does the video provide regarding the stock price prediction?

The video provides a disclaimer that the stock price prediction is based on a lot of estimates and assumptions, and that there are many factors that could change the outcome. It is for informational purposes only and should be taken with a grain of salt.

Outlines

00:00

🤖 Microsoft Stock Price Prediction for 2030

The video discusses a projection of Microsoft's stock price potentially reaching $1,000 per share by 2030. It starts by acknowledging the current stock price of $418 and highlights the company's strong performance, especially after integrating Open AI's chat GPT into its products. The video then delves into the forward price-to-earnings ratio and the expected earnings per share growth, which is currently forecasted at 16.3% annually for the next five years. The presenter uses these figures to model different scenarios for Microsoft's stock price in 2030, considering various PE multiples and EPS growth rates, and concludes that barring any unforeseen setbacks, Microsoft's stock price is likely to significantly increase.

05:01

💹 Evaluating Microsoft's Stock Price Trajectory and Potential Headwinds

This paragraph explores various scenarios that could affect Microsoft's stock price by 2030, starting from the current price of $418 per share. It considers different PE multiples, such as 28, 25, and 20, and their impact on the stock price, which could range from $928 to $661 per share. The video also contemplates the effect of varying earnings per share growth rates, with a 6% growth rate still indicating an increase in stock price, while a 4% growth rate might result in a flat or slightly decreased stock price. The presenter predicts that the most likely scenario places Microsoft's stock price between $1,900 and $1,050 per share by 2030, with a midpoint of $1,000. The video concludes by emphasizing the speculative nature of stock predictions and the inherent uncertainties in financial forecasting.

Keywords

💡Microsoft stock

Microsoft stock refers to the shares of Microsoft Corporation, a leading technology company. In the video, the speaker discusses the potential for Microsoft's stock price to reach $1,000 per share by 2030, analyzing its current performance and future growth prospects.

💡Stock price prediction

Stock price prediction involves estimating the future value of a company's shares based on various factors and assumptions. The video is centered around predicting Microsoft's stock price, using current data and forecasts to project its value in 2030.

💡Forward PE ratio

The forward price-to-earnings (PE) ratio is a valuation metric that compares a company's share price to its expected earnings per share (EPS) over the next year. In the script, the forward PE ratio is used to project Microsoft's stock price based on its anticipated earnings growth.

💡Earnings per share (EPS)

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. The video script mentions that analysts expect Microsoft's EPS to grow, which is a key factor in the stock price prediction.

💡Open AI

Open AI is a research organization that aims to develop artificial general intelligence (AGI). The script notes that Microsoft's investment in Open AI and the integration of its technologies, such as chat GPT, are contributing to Microsoft's stock price boost.

💡Replacement cycle

The replacement cycle refers to the period after which consumers are likely to replace durable goods, such as personal computers. The video discusses how the cycle that began with increased PC purchases in 2020 and 2021 could benefit Microsoft as these devices age and need upgrading.

💡Growth rate

Growth rate is the rate at which a variable increases over time. The script uses different growth rate scenarios for Microsoft's EPS to predict various stock price outcomes by 2030, highlighting the importance of growth in valuation.

💡Wall Street analysts

Wall Street analysts are professionals who study companies and make predictions about their financial performance. The video relies on these analysts' forecasts for Microsoft's EPS and growth rate to make its stock price predictions.

💡AI Tech technology

AI Tech technology refers to advancements in artificial intelligence that are integrated into various products and services. The script suggests that the incorporation of AI into personal computers will make them more appealing for consumers, potentially boosting Microsoft's sales.

💡Headwinds

In a financial context, headwinds refer to factors that oppose a company's progress or growth. The video script considers scenarios where headwinds could affect Microsoft's valuation and, consequently, its stock price.

💡Financial analysis

Financial analysis is the process of evaluating a company's financial performance and position by reviewing its financial statements and other data. The video mentions a free financial analysis offer, indicating the value of such analysis in understanding and predicting stock performance.

Highlights

Video aims to predict if Microsoft stock could reach $1,000 per share by 2030.

Microsoft's current stock price is $418 per share, with a history of exceptional performance.

Microsoft was an early investor in OpenAI, integrating its technology into cloud services and products.

Analysts expect Microsoft to deliver $13.37 in earnings per share in 2025, up from $11.65 in 2024.

Wall Street analysts project a 16.3% earnings per share growth for Microsoft over the next 5 years.

Microsoft stands to benefit from the replacement cycle of personal computers purchased during the pandemic.

The replacement cycle for personal computers is expected to peak in 2025 and 2026.

New computers infused with AI technology will entice upgrades from those who bought PCs in 2020 and 2021.

Microsoft's position in benefiting from AI and the PC replacement cycle is highlighted as a strong trend.

Applying a 16% growth rate to projected earnings results in a 2031 EPS forecast of $338.

If the current valuation remains, Microsoft stock could reach $1,388 by 2030.

Different valuation multiples result in varying stock price predictions for 2030.

A decrease in valuation to 28 could result in a 2030 stock price of $928.

A valuation of 25 could see the stock price rise to $827 per share by 2030.

The lowest scenario with a 20 valuation multiple predicts a 50% increase to $661 per share.

Microsoft's stock price is expected to rise as long as EPS growth is at least 6%.

The most likely scenario predicts a 2030 stock price between $1,900 and $1,050, with a midpoint of $1,000.

The video emphasizes the unpredictability of stock price predictions and the reliance on analyst estimates.

Transcripts

hey everyone in this video I'm going to

look at Microsoft stock and answer

whether or not I think Microsoft stock

could reach $1,000 per share by the year

2030 and offer different scenarios for

where Microsoft stock could be in 20s so

this is kind of like a stock price

prediction video for Microsoft stock so

without further Ado let's jump right

into this anal I want to thank the mle

fo for sponsoring this video visit

full.com parev for the 10 best stocks to

buy now some of the numbers I'm going to

need for one is Microsoft's current

stock price right now it's trading at

$418 per share you can see the stock

price has performed exceptionally well

after bottoming out around $230 per

share early in 2023 of course Microsoft

was one of the early investors in open

Ai and it's incorporating open AI chat

GPT into its Suite of cloud services

into its Suite of products and that's

providing a huge boost for Microsoft and

its share price in recent months also

I'm going to need Microsoft's forward

price to earnings ratio currently it's

trading at a forward PE of

that are following Microsoft stock they

think it's going to deliver

$13.37 in earnings per share in

20125 that's going to be up from

$11.65 in 2024 so analysts on Wall

Street are optimistic about Microsoft's

earnings per share prospects over the

next few years to be sure now looking at

longer term analysts on Wall Street are

expecting Microsoft to generate 16.3%

earning earnings per share growth each

year for the next 5 years on top of the

growth that they're expecting over the

next two years into

2025 as I mentioned already the analysts

on Wall Street that are following

Microsoft stock are optimistic about its

forecast about its Outlook in addition

to Microsoft's position in benefiting

from the rising effectiveness of AI

Microsoft is also in a position to

benefit from the replacement cycle of

personal computer

remember in 2020 and 2021 there was a

surge in purchases of personal computers

because now people were working from

home learning from home entertaining

from home and they needed more personal

computers to accomplish those Feats now

that created a gap of purchases because

if you bought a computer in 2020 and

2021 you're probably not going to need

one in 2022 you're not going to need one

in 2023 these are long lasting Goods

they last anywhere between 4 to 6 years

so in 2024 this is the start of that

replacement cycle from the computers

that were purchased in 2020 just the

beginning just the first year of that

replacement cycle that's going to enter

into the peak phase next year in 2025

and in 2026 as those computers purchased

in 2020 and 2021 start to show their age

and these newer computers that are

getting infused with AI Tech technology

are going to be more enticing to those

folks that bought computers in 2020 and

2021 they're going to want to upgrade to

those newer generation models that

provide more AI capability so Microsoft

is in an excellent position to benefit

from both of those strong Trends all

right so now that we've got the numbers

that we need to make our stock price

prediction we can start looking at our

model so like I mentioned

$13.37 is what analysts on Wall Street

are expecting Microsoft to earn per

share in

2025 additionally they are expecting

Microsoft to grow by 16.3% per year for

the next 5 years so I'm applying this

16% growth rate to the $13 earnings per

share and I'm extending it out for 6

years to get a 2031 earnings per share

forecast of

$338 I've applied this for 6 years

because I need the 2031 EPS if I want to

get a price for 2030 I need the one year

ahead EPS Target so now I'll draw your

attention here to the right hand side

where I've got the 2031 EPS of 33 and if

I apply it's forward PE multiple which I

got from earlier the current

valuation that will give me a stock

price for Microsoft of

$1,388

to in 2030 so if all else Remains the

Same Microsoft stock is headed on a

trajectory to exceed $11,000 per share

by 2030 and currently it's at $418 per

share so that would mean it more than

doubles from its current share price if

all else Remains the Same if there are

no unanticipated headwinds in front of

Microsoft but if there are some

headwinds and the valuation were to

decrease to 28 instead of 31 then

Microsoft stock price could reach $928

per share by 2030 still not bad more

than double right if that headwind is

even stronger and the valuation Falls

even more down to 25 then Microsoft

stock price could rise nearly double to

$827 per share and finally the lowest

multiple I have applied in this scenario

is 20 and if that scenario were to play

out Microsoft stock price could increase

by roughly 50% to

$661 per share if you'll notice all of

the scenarios I have played out here

have Microsoft stock price increasing

meaningfully from where it's currently

trading the only scenario that would

entail Microsoft stock price falling

would be if its earnings per share

growth rate were to come in

significantly below where it is now if I

were to model an earnings per share

growth rate of just 8% for Microsoft

over the next 6 years

and I keep these multiples where they at

its stock price would still be expected

to rise over the next six years although

by not as much the scenario where the

stock price could fall is if the growth

rate in earnings per share is at roughly

4% in that case the stock price would be

expected to remain roughly flat or maybe

down a little bit so you could see here

that as long as Microsoft grows its

earnings per share by at least 6% the

stock price is likely to be higher 6

years from now and if the stock price

increases by the rate that Wall Street

analyst expect it to grow then its stock

price is likely to be much much higher

than where it's at now so where do I

think is the most likely scenario for

where Microsoft stock price could be by

2030 it's going to be right at the

midpoint of $1,000 so it's I think it's

going to be between one 900 50 and

$1,050 per share or at the midpoint

$1,000 per share so just like the

headline of the video stated Microsoft

stock price could reach exactly $11,000

per share by 2030 by no means take that

to mean that this is some kind of

precise stock price prediction there's a

lot of estimates and assumptions I used

in this stock price prediction take that

with the grain of salt this is only for

informational purposes there is a lot

that could go different and I showed you

if I change the growth rate that could

change the values significantly and

nobody knows what's going to happen in

the future and Wall Street analysts have

known to make mistakes on their forecast

so this is using a lot of Wall Street

analyst estimates so a lot can go wrong

but if all else Remains the Same and

there isn't anything to throw Microsoft

off Target this is where it could end up

in 2030 Before I Let You Go let me tell

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