Microsoft Corp.'s (NASDAQ: MSFT) artificial intelligence momentum is expected to drive significant growth in the coming years, as highlighted by Wedbush Securities analyst Dan Ives. Following Microsoft's first-quarter earnings report on Wednesday, Ives shared his bullish outlook, underscoring the tech giant's role in the unfolding AI revolution.
What Happened: In an appearance on CNBC's Overtime, Ives stated, "This is a company firing on all cylinders. We sit here 6-9 months from now, this is a $4 trillion market cap."
Microsoft reported first-quarter revenue of $65.6 billion, marking a 16% increase year-over-year and surpassing the consensus estimate of $64.51 billion, according to Benzinga Pro.
Earnings per share reached $3.30, exceeding expectations of $3.09. The company's operating income also rose to $65.6 billion, up 14% from last year, showcasing robust performance amid expanding AI-driven initiatives.
Ives highlighted the enthusiasm around Microsoft's Intelligent Cloud segment, suggesting a bright outlook as AI continues to bolster revenue streams. "This is a growth acceleration story," Ives noted on X (formerly Twitter), further asserting that "cloud will drive growth looking ahead."
He added, "It is still the first, second inning of this AI revolution." Ives's comments reflect his belief that Microsoft's AI and cloud initiatives will position the company for long-term growth, potentially propelling it toward a historic valuation.
Why It Matters: Microsoft's strong performance in the AI sector is consistent with recent trends. The company's aggressive push into AI infrastructure has been well-supported by demand, with 59% of its partners seeing its CapEx investments as such, according to a survey by JPMorgan.
However, Microsoft has also faced challenges in the AI space, such as alleged covert lobbying campaigns by Google to undermine its cloud computing business.
Meanwhile, Microsoft's potential Bitcoin investment has also been a topic of interest, with MicroStrategy's Michael Saylor humorously reaching out to Microsoft CEO Satya Nadella to offer his assistance in creating the next trillion-dollar opportunity.
Price Action: Microsoft Corp's stock closed at $432.53 on Wednesday, up 0.13% for the day. In after-hours trading, the stock declined by 3.71%. Year-to-date, Microsoft shares have seen a notable gain of 16.63%, according to data from Benzinga Pro.