Key Takeaways
- Microsoft is scheduled to report its fiscal second-quarter results after the closing bell Wednesday.
- Morgan Stanley analysts said a “wall of worry” has created a potentially attractive entry point for the stock.
- Revenue is expected to grow year-over-year, particularly within Microsoft’s Intelligent Cloud segment.
Microsoft (MSFT) is set to report fiscal second-quarter earnings after the market closes Wednesday, with analysts largely bullish ahead of the results.
“Investor sentiment has shifted negative as a ‘wall of worry’ around gross margins, capex, GenAI monetization and the OpenAI relationship builds,” Morgan Stanley analysts said recently, noting that Microsoft has underperformed other large cap software companies over the past three months.
The firm lowered its price target to $540 from $548 but said Microsoft’s position in generative artificial intelligence and the recent market trends create “an attractive entry point.”
Overall, 18 of 19 analysts tracked by Visible Alpha have a “buy” or equivalent rating, compared to 1 “hold” rating. The consensus price target is just over $517, a 16% premium to the stock’s Friday close around $444.
Wall Street expects Microsoft to report revenue of $68.92 billion, up 11% year-over-year; and earnings of $23.36 billion, or $3.13 per share, up from $21.87 billion, or $2.93 per share a year earlier. Revenue from Microsoft’s Intelligent Cloud segment, which includes its Azure cloud computing platform, is expected to climb 20% to $25.76 billion.
Jefferies analysts are “confident in Azure’s reacceleration” in the second half of the fiscal year, the firm said recently. The analysts pointed to a recent Microsoft blog post announcing a “new, large Azure commitment” from ChatGPT maker OpenAI. Jefferies holds a “buy” rating and a price target of $550.
Shares of Microsoft are up about 11% over the past 12 months.
As Microsoft prepares to release its earnings report, analysts are closely watching the tech giant’s stock performance. With the company’s recent growth and success in cloud computing, many analysts are optimistic about Microsoft’s potential for strong earnings. Some analysts believe that Microsoft’s diversified business model, including its thriving cloud services and software products, will continue to drive growth and profitability.
On the other hand, some analysts have raised concerns about potential headwinds facing Microsoft, such as increased competition in the cloud computing space and potential regulatory challenges. However, overall sentiment among analysts remains largely positive, with many expecting Microsoft to exceed earnings expectations.
As investors eagerly await Microsoft’s earnings report, the consensus among analysts is that the company’s stock has strong potential for growth in the long term. It will be interesting to see how Microsoft performs in the upcoming quarter and how the market reacts to its earnings report. Stay tuned for updates on Microsoft’s stock performance post-earnings release.
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