Buy Alert: Microsoft Stock Poised for 31% Gain on AI Innovations

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  • Microsoft (MSFT) remains a top Magnificent 7 stock for long-term investors because of the company’s core business model.
  • Cash flow from the software business is reinvested into more profitable segments.
  • With AI integrations, investors can argue shares are undervalued. 
Microsoft stock - Buy Alert: Microsoft Stock Poised for 31% Gain on AI Innovations

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Microsoft (NASDAQ:MSFT) remains among the top AI stocks investors look to for growth right now. Microsoft stock is certainly among the best long-term options for investors looking for dominant growth long term.

There are many reasons for such a view. The company’s core software business is the cash cow allowing the company to reinvest a tremendous amount of capital into AI integrations for its core products.

The company’s cloud computing division continues to drive vigorous growth, and is competing for market share lead in a high-profit and fast-growing space. Microsoft recently introduced Copilot+ PCs with advanced AI capabilities and continues to innovate in AI integration.

These factors alone make the stock worth considering. Let’s dive into a few other reasons why investors are so bullish on Microsoft stock, and why this is a Magnificent 7 stock to buy and hold long term.

Committed OpenAI Expansion

Microsoft has deepened its commitment to Hong Kong by introducing generative artificial intelligence services in education, following restrictions by OpenAI in the region.

Collaborating with the Education University of Hong Kong Jockey Club Primary School, Microsoft integrated AI tools, including chatbots and text-to-image generators powered by OpenAI’s GPT and Dall-E models, into science classes for approximately 220 fifth and sixth-grade students during the last academic year.

The company also expanded its K-12 presence in Hong Kong following collaborations with eight local universities last year to promote AI services. Partnering with Gamenoodlesoup, an education and tech developer, since April 2023, the company tailored Microsoft Azure cloud services to meet specific school needs. 

This is one example of many AI integrations that investors may not be aware of that could spur additional growth over time. The number of verticals in this space is incredible, and Microsoft remains among the best options to consider in this regard.

AI Events 

Microsoft unveiled a key AI integration using Arm (NASDAQ:ARM) processors at a Surface event on May 20th. Key highlights included the launch of Copilot Plus PCs, featuring built-in NPUs for local AI tasks like Recall.

Also unveiled were Surface Laptop and Surface Pro Tablet powered by Qualcomm (NASDAQ:QCOM) Snapdragon X processors, promising enhanced performance and efficiency. The event showcased new Copilot Plus PCs from a range of notable PC providers.

Competition certainly exists in this space, with others looking to launch an AI PC chipset in late 2025 for Windows PCs.

That said, the company’s status as a key PC software provider should position the company well to have its core AI technologies integrated into new machines as they’re released. It will certainly be important for investors to watch how these unveilings unfold over time.

At Microsoft’s Surface event, the company also introduced a lineup of Copilot Plus PCs from leading OEMs. Among them, the Swift 14 AI stands out with Qualcomm Snapdragon X series processors, offering options like the 12-core Snapdragon X Elite or 10-core X Plus, with up to 32GB RAM and 1TB M.2 SSD storage.

Microsoft Stock Remains a Strong Buy

Microsoft leverages not just business software and AI but also gaming and social media for substantial revenue. Brands like LinkedIn and Xbox contribute significantly. The company’s Activision Blizzard acquisition boosted gaming revenue.

Overall, it’s clear that there are so many verticals and business lines Microsoft can leverage for growth that investors are certainly pricing in the fair amount of enthusiasm into this stock.

Over the long-term, MSFT stock has been as reliable a long-term investment as exists. Shares of this tech giant are up 23% year-to-date and 233% over the past five years. Analysts predict potential new highs with an average price target indicating 12% upside, while the highest target of $600 suggests a 31% gain from prices at the time of writing.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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