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Microsoft Shares Surge On Upbeat Q1 Results, Analysts Raise Price Targets

Azure and AI growth, margin expansion, and strong performance drive positive outlook

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Bernstein On Microsoft

Analyst Mark Moerdler maintained an Outperform rating while raising the price target from $400 to $406.

Shares of Microsoft Corp climbed in early trading on Wednesday, after the company reported upbeat fiscal first-quarter results. MATEUSZ SLODKOWSKI/GETTY IMAGES 

“Microsoft knocked it out of the park last night with many good things to report in their Q1 results, delivering a solid start to FY24,” Moerdler said in a note. Azure and AI tailwinds accelerated during the quarter, while margin expansion was strong, he mentioned.

Management “sounded bullish” on the prospects for Copilot, the analyst stated.

Microsoft managed to achieve all this even against economic conditions “that are not yet showing improvement and are still negatively impacting other software vendors,” he added.

Piper Sandler On Microsoft

Analyst Brent Bracelin reiterated an Overweight rating while lifting the price target from $400 to $425.

“The $2B+ top-line beat (largest in two years) coupled with tight expense management drove an impressive 27% EPS increase on 12% revenue growth,” Bracelin wrote in a note.

“Impressive margin expansion in the face of heavy AI investments hints at the longer-term profit potential for MSFT, in our view, as it leverages a common Azure infrastructure stack across an increasing number of internal and external workloads,” he added.

Oppenheimer On Microsoft

Analyst Timothy Horan reaffirmed an Outperform rating and price target of $410.

Microsoft reported upbeat fiscal first-quarter results, with “broad-based acceleration across all segments, as constant currency revenue rose 12% (+12.8% USD), 470bps above model,” Horan said.

While Azure-OpenAI customers rose to 18,000, from the previous quarter’s 11,000, Fabric AI data platform customers doubled to 16,000 in the first quarter, he added.

Morgan Stanley On Microsoft

Analyst Keith Weiss maintained an Overweight rating and price target of $415.

“Accelerating revenue growth, op margins up 465 bps YoY and 27% YoY EPS growth amidst a still volatile IT spending environment well illustrates Microsoft’s differentiated position,” Weiss wrote in a note.

“Azure growth accelerated to 28% cc in 1Q and the company’s target of durable 26-27% cc growth sets a conservative baseline for the back half of FY24,” the analyst stated. “Generative AI contribution is ramping nicely, with a 300 bps contribution to Azure growth and ~18,000 customers using Azure OpenAI Services,” he added.

Wedbush On Microsoft

Analyst Daniel Ives reiterated an Outperform rating and price target of $400.

Microsoft delivered a beat on both revenues and earnings, “driven by 29% Azure growth which came in above Street expectation of 26% as the company saw heightened demand across its entire product portfolio with the infusion of AI across its tech stack,” Ives said.

“Microsoft’s Github Copilot continues to see more traction with over 1 million paid Copilot users and more than 37k organizations subscribed to this product for business,” he added.

BofA Securities On Microsoft

Analyst Brad Sills reaffirmed a Buy rating and price target of $415.

Microsoft’s quarterly results were strong, with upside across the major franchises, Sills said in a note.

Shares of Microsoft Corp climbed in early trading on Wednesday, after the company reported upbeat fiscal first-quarter results. MATEUSZ SLODKOWSKI/GETTY IMAGES 

“While AI, enterprise mobility and security drove healthy Azure upside, new Azure workloads (excl AI) were weighed down by the still tough macro,” the analyst wrote. “We believe that macro improvement could drive upside to an already solid outlook for 26%-27% cc growth as we move through the year,” he added.

Wolfe Research On Microsoft

Analyst Alex Zukin maintained an Outperform rating and price target of $425.

“With investors expecting a mixed print as the AI hype cycle fades, MSFT delivered an all-around “block-rockin” beat across the board,” Zukin wrote. The company delivered the largest Azure outperformance to-date, he added.

The analyst said he believed Microsoft’s path towards outperformance is “highly achievable” as the AI contribution “should continue to grow every quarter.”

“We strongly believe that MSFT is winning market and mind-share with a combination of a high ROI consolidation motion with E5 as well as a best-in-class AI stack, all while margins are INCREASING,” he further stated.

MSFT Price Action: Shares of Microsoft had risen by 2.49% to $338.76 at the time of publication Wednesday.

Produced in association with Benzinga

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