Microsoft AI Unit Hits $37B Run Rate as Shares Eye $515 Recovery
MSFT•Microsoft shares dropped from a $542 high to about $357 in early April, trading at 25x forward earnings—30% below the five-year median. Its AI unit runs at a $37 billion annual revenue rate (up 123% YoY) and catalysts like Copilot monetization and an OpenAI deal could boost shares to $510-515.
1. Stock Decline and Valuation
Microsoft shares declined from a $542 peak to around $357 in early April, trading at 25x forward earnings—30% below its five-year median. This discount on historical multiples underscores market caution despite strong growth prospects.
2. AI Business Growth
The AI segment has reached a $37 billion annual revenue run rate, representing 123% year-over-year growth. Gains are driven by enterprise uptake of Copilot, expanded Azure AI deployments and partnerships across key industries.
3. Catalysts for Recovery
Key upcoming events include broader Copilot monetization, an OpenAI deal restructure that may unlock additional revenue streams, insights from the Microsoft Build conference on new AI offerings, and continued endorsements from major investors driving sentiment.
