Lynch Picks: Buy Microsoft (MSFT)
Microsoft recently disclosed a fresh round of funding for privately held OpenAI, a developer of artificial intelligence (AI) products. The digital behemoth will inject cash into the AI firm for the third time. Not surprisingly, $MSFT offers a wide range of software products and will use OpenAI's capabilities for its industry-leading Azure cloud computing platform.
The most well-known product from OpenAI is ChatGPT, an AI-powered chatbot that can produce articles and poems with little to no human interaction. Some worry that its capacity to produce these works would endanger the ability of those who earn a living by producing such things to support themselves.
Although the corporation said on Monday that it was investing billions of dollars in a "multi-year" partnership, specific financial information has not been made public. According to those familiar with the negotiations, OpenAI was asking Microsoft for $10 billion at a $29 billion valuation.
Microsoft Azure is the second-largest cloud vendor in the world, and the business is expanding. Its success is attributable to its emphasis on hybrid computing, a comprehensive set of developer tools, state-of-the-art database options, and market-dominating machine learning applications. The company's Azure section climbed 26% in the most recent quarter, offsetting a 15% decline in the Windows segment. So over the coming years, expect results that are similarly excellent overall.
By the beginning of 2023, that valuation fell to less than nine times revenues, close to a three-year low. But, of course, a downturn in business and consumer spending would describe any recession during the coming quarters.
In summary, Microsoft holds a dominant position in a variety of markets, the majority of which are anticipated to register double-digit growth through the end of the decade as period Microsoft shareholders could anticipate double-digit revenue growth over the same period, possibly between 15-20% annually. Its current valuation looks favorable, and $MSFT is well-positioned to grow in the following years.
Source: Yahoo Finance