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Microsoft stock has jumped 45% so far this year.
Fabrice Coffrini/AFP via Getty Images
With
Microsoft
’s
June quarter earnings report less than a week away, analysts are inching up expectations.
The tech giant reports on July 25, and Wall Street is predicting strong results—with a significant contribution from the company’s artificial intelligence software push over the next few years.
Earlier this week, Microsoft (ticker: MSFT) shares hit a record after the company announced higher-than-expected pricing for its AI copilot software for Microsoft 365—which includes the company’s suite of office applications, like Word, Outlook, Teams and Excel.
Analysts see further stock gains ahead.
Stifel analyst Brad Reback repeated his Buy rating on Microsoft shares on Thursday, and boosted his target price on the stock to $380 from $320. Microsoft stock was 1.4% lower at $350.08 in recent Thursday trading.
Reback says Microsoft should post “solid upside” to its forecast of 26% to 27% growth in the Azure cloud business in the quarter—with the recent pressure on growth from customers pushing to optimize their spending likely to abate. He sees strong growth in the Office 365 business, but persistent headwinds in the PC-related business, given “lackluster post-Covid demand.”
The June quarter marks the end of the Microsoft’s fiscal year, and the company is likely to provide some commentary on the outlook for fiscal 2024. Reback expects Microsoft to focus on growing contributions from artificial intelligence, with contributions from both Azure and the new AI Copilot software for the Microsoft 365 suite of office applications. He projects guidance will call for double-digit revenue percentage growth, excluding any contribution from the pending acquisition of
Activision Blizzard
(ATVI).
Citi analyst Tyler Radke also repeated his Buy rating on the stock, lifting his target price to $425 from $340. Radke writes that a proprietary reseller survey finds spending growth is likely to accelerate into fiscal 2024.
“Though still acknowledging some areas of macro caution, we see a positive set-up into Q4,” he writes. Pointing to both positive partner commentary and generative AI tailwinds, he’s raising estimates for the next three years for both Office and Azure. His view is that Microsoft offers investors “a unique earnings growth acceleration and Gen AI monetization story in mega-cap software.”
Write to Eric J. Savitz at [email protected]
Source: https://www.barrons.com/articles/microsoft-stock-price-earnings-ai-8fde4204?siteid=yhoof2&yptr=yahoo