The Metaverse, that tantalizing realm where the physical and digital worlds seamlessly converge, is capturing the imagination of the tech world. According to investment bank Bernstein, one tech giant stands to emerge as a Metaverse powerhouse – Microsoft.
Analyst Mark Moerdler highlights that Microsoft possesses a robust arsenal of products that are well-suited for Metaverse integration. First and foremost is the Azure platform, Microsoft’s cloud service juggernaut, a fundamental component for hosting the intricate environments of the Metaverse. Moreover, Microsoft boasts in-house hardware innovations like the HoloLens, the mixed-reality headset, a critical piece for immersive experiences in the Metaverse. In addition, Microsoft’s ownership of LinkedIn provides an invaluable bridge to manage the business facets of the evolving Metaverse.
Moerdler remarks, “Microsoft offers a multitude of products essential for the Metaverse. As the Metaverse develops, it could become a significant driver for future growth across various Microsoft divisions.”
Diversified Revenue Streams
Beyond its Metaverse prospects, Microsoft continues to profit from Office 365, a cloud-based platform with perennial money-spinners like Word and Excel offered on a subscription basis. This ongoing transition to cloud-based services is expected to endure, with Microsoft primed to reap the rewards, especially through its Azure platform. Microsoft’s diversified revenue streams include income from LinkedIn, the gaming sector, hardware sales, such as the Surface series, the Bing search engine, and, of course, the Windows operating system. The cloud version, Windows 365, has been available since the previous year, marking another milestone in the company’s evolution.
The benefit of this diversified income model is that Microsoft isn’t overly reliant on the triumph or stumble of the Metaverse, which can be a speculative arena for pure-play Metaverse ventures.
Dividends
For income-minded investors, Microsoft pays a quarterly dividend. In February, it will distribute 62 cents per share, and throughout 2022, the total dividend payout will amount to $2.48, translating into a 0.8% dividend yield.
Microsoft stock price Projections
Mark Moerdler at Bernstein has set a price target of $364 for Microsoft, representing a 17% increase over Friday’s closing price of $310.2. Other investment banks are echoing the enthusiasm. Jefferies and Wells Fargo anticipate a price target of $400 and $425, respectively. BMO Capital has set a slightly lower target of $360. Collectively, this flurry of buy recommendations underscores Microsoft’s robust positioning in the evolving Metaverse landscape.
