Microsoft (NASDAQ: MSFT) is currently the 2nd largest company in the world with a market cap of $2.27 trillion and it looks like it will get even bigger.
Yesterday, MSFT announced their plan to buy Activision Blizzard (ATVI), the American gaming company, in an all-cash transaction. MSFT already has a presence in the gaming space thanks to the Xbox platform and Game Pass subscription service, but their latest acquisition target will result in dramatic change in the high growth sector of gaming production and distribution. However, the acquisition is not a slam dunk yet, as both US and EU regulators have been increasingly critical of large tech companies in recent times, including MSFT, so there is the risk of anti-trust complications.

  • MSFT up 2.7% on day, after loss of 2.4% yesterday
  • ATVI stable today, after gain of 26% yesterday
  • SONY shares fell 13% today, losing $20 billion in market cap, as investors worry about the stiff competition that the Playstation producer will face

Equity Research Analysts were scrambling to update their valuation models and price targets today to account for the changing MSFT outlook but the message is clear and it is very bullish.
A Bloomberg survey of Research Analysts currently indicates that 90% have a “BUY” recommendation on MSFT stock, whilst only 10% are “HOLD”. Notably, there are no analysts with a “SELL” position.

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