1 AI Stock to Buy Before It Jumps 15%, According to a Certain Wall Street Analyst

AI Stocks Performance - Nvidia has surged more than 183% year-to-date, while Palantir Technologies has jumped over 313% [1] - Microsoft, despite its significant AI investments, has only risen 14.7% year-to-date, underperforming both other AI stocks and the S&P 500, which is up 26.8% [1] Analyst's Perspective on Microsoft - Citibank's Tyler Radke, a seasoned Microsoft analyst, maintains a buy rating with a $497 price target, representing a 15% upside from the current $430 share price [4] - Radke expects Microsoft's growth numbers to improve significantly during the first six months of 2025, suggesting a limited window for investors to capitalize before the market adjusts [5] Microsoft's AI Strategy and Efficiency - Microsoft has focused on cost optimization and operational efficiency, particularly in AI, which is expected to sustain strong earnings growth [6] - The company has heavily invested in OpenAI and developed its Copilot AI assistant, embedding it across internal and external software, including Microsoft 365, to boost productivity [7] - Radke predicts that the deployment of Copilot will lead to a significant increase in productivity, with developers potentially becoming 50% more efficient using AI tools [8] Azure Cloud Platform and AI Monetization - Azure's revenue grew by 33% year-over-year in the most recent quarter, with AI contributing 8% of that growth [8] - Microsoft anticipates a surge in growth during the first half of 2025, driven by previous AI-related capital expenditures and increased capacity [8] - Radke believes that AI capital expenditures will start paying off in 2025, with "halo effects" driving higher-margin platform usage as customers adopt AI services [9] Valuation and Investment Outlook - Microsoft's valuation at 13 times sales is attractive relative to peers but somewhat expensive compared to its historical average [11] - The company is projected to see a revenue growth surge in the first half of 2025, potentially rewarding investors who buy in now, especially given its underperformance relative to AI peers and the broader market [10]