Microsoft Corporation (NASDAQ:MSFT) shares were trading lower Thursday after the company beat analyst estimates for its fiscal first quarter a day earlier. Here’s a look at what analysts liked about the earnings report and why most are raising their price targets on the stock.
The Microsoft Analysts
Scotiabank analyst Patrick Colville reiterated a Sector Outperform rating on Microsoft and raised the price target from $625 to $650.
KeyBanc analyst Jackson Ader maintained an Overweight rating and raised the price target from $600 to $630.
DA Davidson analyst Gil Luria reiterated a Buy rating and raised the price target from $550 to $650.
Cantor Fitzgerald analyst Thomas Blakey maintained an Overweight rating and raised the price target from $608 to $630.
JPMorgan analyst Samik Chatterjee reiterated an Overweight rating with a price target of $625.
Scotiabank on MSFT Stock
Azure growth was the key highlight for Colville in the first quarter. The analyst also highlighted the company’s lighter than expected capex.
"Based on our short-lived capex analysis, we estimate Azure can grow in an upside case 54% in 2Q," Colville said.
Colville highlighted Microsoft receiving more than $2.50 in incremental AI revenue for every $1 of AI depreciation.
"We see this print as evidence that the company is a leading horseman of the AI revolution."
KeyBanc on MSFT Stock
Azure, Copilot and Capex were the three focus areas for Ader in results and they all outperformed.
"The three key areas that we are focused on all showed meaningful upside, and the momentum in those areas is expected to continue for the remainder of the year," Ader said.
DA Davidson on MSFT Stock
Luria sees Microsoft’s first quarter having wins for both the software and infrastructure AI offerings.
"Copilot continued to gain adoption, and Azure continued to show accelerating growth," Luria said.
The analyst said Microsoft expects to remain free cash flow positive despite its large capex spending.
Cantor Fitzgerald on MSFT Stock
Azure accelerating despite capacity constraints was the highlight from the first quarter for Blakey.
"We view the quarter as further validation of Microsoft’s AI-led growth opportunity, while continuing to monitor capacity delivery timing, cloud margin pressure from Azure mix and component costs inflation, and the ability to sustain infrastructure returns as investment accelerates," Blakey said
The analyst expects Microsoft to be a "leading beneficiary" for AI intelligence in the enterprise sector.
"With AI investment continuing to scale, we are watching whether efficiency gains and improved monetization can increasingly offset infrastructure costs and support margin stabilization over time."
JPMorgan on MSFT Stock
Chatterjee highlights Azure acceleration and Microsoft’s capital needs being favorable to peers after Q1 results.
"Microsoft delivered a print and outlook that should reinforce the bull thesis around compute efficiencies supporting a broad-based acceleration in growth," Chatterjee said.
The analyst said the strong numbers and forward upside show Microsoft’s ability to balance its compute allocation across multiple growth drivers.
Microsoft Stock Price Action
Microsoft shares were down 1.4% to $523.48 on Thursday versus a 52-week trading range of $349.20 to $551.15. Shares traded higher in the earlier trading session before declining. Microsoft stock is up 10.7% year-to-date.
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