Stock Market

MSFT Forecast: Why This ‘Magnificent 7’ Stock May Be Muted Heading Into 2024

Microsoft (NASDAQ:MSFT) is a member of the “Magnificent Seven” group of tech firms. However, don’t assume that MSFT stock will deliver magnificent returns like it did in 2023’s first half.

Sure, Microsoft’s investors will get exposure to the artificial intelligence market. Yet, current and prospective shareholders should be aware of a significant competitor that Microsoft will have to deal with.

Microsoft delivered outstanding returns to the company’s investors this year from January through July. Don’t be too greedy now, though, as the rest of the year may present significant challenges for Microsoft and its shareholders.

Good News for MSFT Stock

First things first: Microsoft has been in the headlines recently because their company decided to “play ball” with European regulators. It’s a smart move, and Microsoft’s stakeholders should be relieved.

Back when Bill Gates was still the CEO of Microsoft, the company went head-to-head against U.S. regulators. Gates and Microsoft were reluctant to un-bundle the Windows operating system from other products. Hence, consumers were forced to buy more than one product at a time from Microsoft.

Fortunately, Microsoft isn’t attempting to butt heads with regulators in Europe this year. Just recently, Microsoft disclosed it will un-bundle Teams, the teleconferencing product, from the Microsoft 365 and Office 365 suites in the European Economic Area and Switzerland.

In addition, Microsoft will enhance the interoperability of Microsoft 365 and Office 365 with certain third-party software products in Europe.

This could be a win-win scenario, or at the very least, it should help Microsoft to stay in the good graces of European officials.

Microsoft’s Major Concern in the AI Space

Don’t assume that all of the news pertaining to Microsoft is positive, though. Microsoft’s shareholders can certainly be glad that the company invested in OpenAI’s ChatGPT technology. Yet, there’s now a problem facing Microsoft, and it comes from OpenAI.

Specifically, OpenAI just unveiled its enterprise version of ChatGPT (i.e., a version for large businesses). This puts OpenAI in direct competition with Microsoft.

So now, there’s an odd business relationship between Microsoft and OpenAI. Even though Microsoft is a major financial backer of OpenAI, the two companies will now go head-to-head in the enterprise generative AI technology space.

OpenAI’s product is called ChatGPT Enterprise. Meanwhile, Microsoft will continue to provide businesses with access to ChatGPT through the Azure OpenAI Service.

Thus, while Microsoft and ChatGPT were powerful partners in the generative AI market in 2023’s first half, the two companies might now steal market share from each other.

It will be interesting to see how this unusual dynamic plays out, so stay tuned for further updates on this unfolding story.

Take It Slow and Steady With MSFT Stock

Microsoft will undoubtedly continue to generate strong revenues from its generative AI-enhanced products. Also, it’s encouraging to know that Microsoft is open to appeasing European regulators.

Still, investors should jump to the conclusion that Microsoft will provide easy returns to the shareholders. After all, the second half of 2023 might not offer the share-price gains that the first half of the year did.

Overall, MSFT stock gets a solid “B” grade. It’s fine to hold some Microsoft shares, but don’t be too hasty in adding to your position right now.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.