From Financial Modeling Prep: 2024-12-23 14:28:00

Loop Capital analysts raised Microsoft’s price target to $550 from $500, maintaining a Buy rating due to confidence in long-term free cash flow growth despite AI investments. Microsoft’s valuation is slightly above peers, with a 2024/2025 EV/FCF multiple of 45x and 44x. The company trades at 36x and 33x P/E for 2024 and 2025, below peer averages.

Investments in AI initiatives are affecting Microsoft’s near-term FCF and profit margins, but analysts believe they will drive medium-term growth. A DCF model projects FCF to grow at a 17% CAGR through 2028, accelerating to 30% in 2028 and 40% in 2030. Growth is expected to taper gradually beyond 2030, stabilizing at 4.5% by 2035.



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