Editor’s Note: Ingrid Hendershot, editor of Hendershot Investments, had the seventh best-performing recommendation from our annual “Top Picks 2023” Report through mid-year. The software company Microsoft (MSFT) produced a total return of 49.9% during the tracked period. I reached out to her for updated commentary and guidance on her “Terrific Ten” stock, and this is what she provided...
MSFT is making a multiyear, multibillion-dollar investment in OpenAI, which could approximate $10 billion. This will substantially increase its investment in the popular ChatGPT chatbot as Microsoft looks to expand the use of artificial intelligence in its products.
Microsoft plans to incorporate AI tools into all its products and make them available as platforms for other businesses to build on. Microsoft is also incorporating AI software into its suite of products, ranging from its design app Microsoft Design to search app Bing.
It also will help finance the computing power OpenAI needs to run its various products on Microsoft’s Azure cloud platform. The excitement around AI led to the surge in Microsoft’s stock price so far this year with the stock currently appearing fairly valued.
Longer-term, Microsoft CEO Satya Nadella noted that the software company aims to reach $500 billion in revenue by the 2030 fiscal year, more than doubling from its current size, and implying at least 10% annual revenue growth.
Recommended Action: Buy MSFT