Could buying Microsoft stock now be like buying Alphabet in mid-2025 at a share price of $150?

Microsoft‘s (NASDAQ: MSFT) stock has underperformed (in 2026, its share price has fallen greater than 10%). As a result of it’s a software program firm, traders aren’t in it.

Trying at the stock as we speak nonetheless, I see similarities to Alphabet (NASDAQ: GOOG) (Google) again in mid-2025 when it was out of favour and buying and selling close to $150 (it has since soared to close $400). Right here’s why I believe Microsoft might be set to surge at some level simply like Alphabet has.

Inspecting Alphabet’s rebound

In mid-2025, a lot of traders had been utterly writing Alphabet off. The speculation was that ChatGPT was going to disrupt Google search and destroy Alphabet’s enterprise mannequin.

Alphabet didn’t sit round doing nothing as individuals began to make use of ChatGPT for search. As a substitute, it used its monetary sources and tech experience to construct an AI product equally pretty much as good (Gemini), after which built-in it into its ecosystem, successful again market share.

Moreover, it labored on growing its personal highly effective AI chips, tensor processing items (TPUs). It’s now promoting these to different tech firms, that means that it has a complete new income stream.

In the end, it was capable of adapt to the altering enterprise panorama and proceed thriving (its newest earnings confirmed income development of 19% at fixed foreign money). As a outcome, its share price has rebounded, hovering to new all-time highs.

Could Microsoft do the identical factor?

Now, I reckon Microsoft is succesful of a comparable turnaround. At present, it’s out of favour as a result of individuals are anticipating its software program gross sales to fall on account of AI disruption and automation. That is a threat. However right here’s the factor – Microsoft’s discovering new methods to generate income.

For instance, in its current earnings it instructed traders that its AI-powered digital assistant service Copilot now has 20m paid enterprise seats. This service prices round £15 a month per consumer, in order that’s a good bit of income.

In the meantime, like Alphabet, Microsoft’s additionally growing its personal chips. Earlier this 12 months, it introduced the launch of Maia 200 – an inference chip designed to enhance the economics of AI token era.

These chips are usually not being offered to different firms as we speak. But when the corporate was to promote them to different companies, there might be a complete new supply of income.

In the end, there are a lot of ways in which Microsoft might reinvent itself for the AI period. I anticipate it to do exactly that – that is a firm with a historical past of evolution.

The stock’s low-cost as we speak

Zooming in on the valuation, Microsoft seems to be fairly low-cost. Trying at the earnings forecast for the 12 months beginning 1 July, the forward-looking price-to-earnings (P/E) ratio’s solely 21. At that a number of, I see the potential for an upward valuation rerating if the corporate can present that it’s having success in the AI period. Up to now, it has usually traded on P/E ratios in the 30s.

After all, there are not any ensures the stock will carry out effectively from right here. AI automation is a threat and sentiment in direction of the stock might stay weak.

At present ranges nonetheless, I like the danger/reward set-up and imagine the stock’s price contemplating. It’s price noting that the common analyst price goal is $564 – about 35% above the present share price.