I’m no technical analyst, but if Microsoft Corporation (NASDAQ:MSFT) stock wants to hit $80 by the end of 2017, it has got to giddy up. Why $80 for MSFT stock?
That’s the 12-month price target Piper Jeffrey analyst Alex Zukin put on Microsoft stock back in December when he initiated coverage of the company. A little more than three months into the year, MSFT stock is up 5.1%, a decent showing but nowhere near the performance it needs to get to $80.
Microsoft stock owners needn’t be too concerned.
InvestorPlace contributor and options specialist Joseph Hargett believes MSFT stock is on the verge of a technical breakout. He reckons the company’s work in artificial intelligence (AI) has gone unnoticed by Wall Street for too long and its stock is ideally situated technically speaking to go on a long run — perhaps even to $80.
What MSFT Stock Has Going for It
“Technically, the shares have recovered nicely after retreating from their late-January highs,” Hargett wrote April 3. “MSFT has since rallied higher along support at its rising 50-day moving average, and Microsoft stock is once again poised to test resistance at $66. A breakout here could mark the start of MSFT’s next upleg in its longer-term rally that began in early 2016.”
As I said in the beginning, I’m not a technical analyst, but I do like to hear and read the opinions of those who are.
I’ve argued in recent articles that Microsoft stock is heading higher because of the progress CEO Satya Nadella is making in cloud computing, which could account for 30% of Microsoft’s overall revenue (higher margins, as well) by the end of 2019. Hargett’s remarks about AI have opened my eyes to another Microsoft revenue stream.
Recently, Salesforce.com, Inc. (NYSE:CRM) introduced Einstein, an artificial intelligence platform that has been integrated into its cloud computing services to provide customers with advanced data analytics. It’s basically information analysis on steroids. With all this data sitting in the cloud, it makes complete sense to leverage artificial intelligence in order to analyze all of it quickly and efficiently.
Not wanting to be left out, Microsoft has partnered with Adobe Systems Incorporated (NASDAQ:ADBE) to provide a solution that combines their respective sales, marketing and intelligence products into one coordinated platform that gives companies a better understanding of their customers.
According to MSFT executive vice president Scott Guthrie, “We believe the combined power of our technologies will allow enterprise businesses to harness their data in new ways, unlocking critical business insights and actionable intelligence.”
Information is just information, but knowledge is power. Big data and analytics might be an overused cliche these days but understanding customers through the parsing of information are critical to a business’s ongoing success.
Bottom Line on Microsoft Stock
And it’s not just for private enterprise; charities are benefiting from a deep dive into data.
“One of the features of technology that I find most exciting for the third sector is how it’s helping to level the playing field,” Steven Grier, Microsoft’s country manager for Scotland said recently. “The power of data, for example, in providing valuable insight about who and where your donors are and when they are likely to donate, is amazingly exciting for charities.”
Microsoft brings to the table the financial muscle to make its partnership with Adobe a success. Although the fruits of this partnership probably won’t be realized until later this year and into 2018, it’s a sign that Nadella and the rest of his management team continue to transform Microsoft stock from a business reliant on the PC and old-school technology into a business that changes with the times.
While AI and cloud computing are certainly interrelated, it would be a mistake for investors to minimize the role artificial intelligence can play in Microsoft’s future.
Is it enough to get MSFT stock to $80 by Dec. 31? We’re about to find out.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.
