Its not clear what quarter you are referring to, the most recent quarter for MSFT was $2.99 EPS up from $2.35 a year ago.

Yes, I realized after I wrote the post that the $2.35 figure was the prior year quarter. For the most recent quarter, the $2.99 EPS represents 27% YoY EPS growth. Assuming Microsoft can achieve an EPS of $3.81 (27%) growth in the quarter ending Sep 30, 2024, it's forward P/E ratio would be about 25. At 27% EPS growth, that gives it a PEG ratio below 1.

One driver for achieving EPS closer to $14 or $15 per share next year would be the upgrade to Office 365 Copilot, which brings an AI assistant to automate tasks for office workers.

Profits have risen faster than sales recently. Do you think this trend will continue? If so, what will be the primary driver?

I analyzed earnings forecasts of the largest companies to try to find trends. The obvious trend I find in companies such as Microsoft, Nvidia, Amazon and Google are massive new revenue streams resulting from AI, and particularly Generative AI.

ChatGPT was the fastest-growing consumer internet app of all time after its launch, notching an estimated 100 million monthly users in just two months. Facebook, for example, took around four and a half years to hit 100 million users after launch.

Microsoft invested $10B in Open AI. That company is now valued at more than $80B, and it's still private.

The use of gen AI in finance is expected to increase global gross domestic product (GDP) by 7% —nearly $7 trillion—and boost productivity growth by 1.5%, according to Goldman Sachs Research.

investopedia.com - Economic impact of generative AI