Microsoft (MSFT.US)'s share price has fallen 18% since the first fiscal quarter, despite disclosing investment commitments of US$250 billion in OpenAI and US$30 billion in Anthropic, according to Jefferies' research report.
Its valuation multiple has still compressed by 23% as investors continued to shift towards semiconductor stocks. However, Microsoft is expected to significantly expand its output this year through its strong execution with massive order backlog, presenting upside potential.
Microsoft's FY2027 EPS valuation at 23x is attractive, lower than the 24x/ 25x of the hyperscale cloud service companies Amazon.com (AMZN.US)/ Alphabet (GOOGL.US), Jefferies added. Microsoft's operational visibility, remaining performance obligation (RPO) value and AI monetization path are clearer compared to the above two enterprises.
Therefore, the broker rated Microsoft at Buy, with a target price of US$675.
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AASTOCKS Financial News
Website: www.aastocks.com
| SG Top Picks |
| Stock & Type |
Code |
Strike(Call Level) |
Last |
Effective Gearing |
| MSFT (C) |
11006 |
550 (-) |
0.165 |
9.1 X |
| MSFT (P) |
10715 |
435 (-) |
0.275 |
10.0 X |
| AMZN (C) |
10004 |
280 (-) |
0.064 |
10.8 X |
| AMZN (P) |
10700 |
180 (-) |
0.028 |
10.3 X |
| ALPBE (C) |
10080 |
360 (-) |
0.430 |
5.5 X |
| ALPBE (P) |
10012 |
230 (-) |
0.080 |
5.8 X |
