Financial experts told MoneyLion that a $1,000 stake in Microsoft could grow toward $2,400 to $2,500 over the next five years if the stock keeps its long-run pace. The projection rests on Microsoft’s roughly 20%-a-year 10-year return and its heavy spending on AI infrastructure, though the experts warn past performance guarantees nothing.
A $1,000 bet on Microsoft could grow toward $2,400 to $2,500 over the next five years, according to Andrew Lokenauth, founder of the blog Fluent in Finance, who spoke to MoneyLion. He built that figure on Microsoft’s longer 10-year pace, closer to 20% a year compounded, and said he leans toward the higher end of the range.
The projection lands after a rough stretch for the stock. Microsoft has been trading around $380 a share, down close to 20% from its highs, and MarketWatch noted the company is heading toward one of its worst annual performances.
Why some experts still see a deal
Several of the experts argue the shares are undervalued. Microsoft is priced below its value now, according to Melanie Musson, a finance expert with Quote.com. According to Musson: “When stock is priced below value, you’re basically getting a deal”, she said.
Lokenauth tied his optimism to Microsoft’s spending. The company is pouring close to $190 billion into artificial intelligence infrastructure this year, he said, and Azure keeps taking share from AWS and Google Cloud. That scale of capital spending, he argued, only happens when a company sees real demand ahead.
The case for caution
The backward-looking math is more modest. A $1,000 stake placed five years ago, dividends included, would be worth around $1,800 today, reflecting a five-year return near 75% to 80%.
The experts also stressed the limits of any such stock valuation exercise. A company this large cannot keep growing at a 25% clip forever, they cautioned, and a decade of good returns shows what has been, not what will be, said Cody Schuiteboer of Best Interest Financial.
Source: AOL
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