Wall Street remains confident on Microsoft’s AI story despite weak guidance. Some say to buy the dip

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Wall Street ******** confident on

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’s AI story despite weak guidance. Some say to buy the dip

Wall Street’s bullish sentiment on

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hasn’t faded, even after the tech giant forecast disappointing revenue growth numbers. On Wednesday,

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posted fiscal first-quarter earnings of $3.30 per share on revenue of $65.59 billion, exceeding analysts’ expectations of $3.10 in earnings per share on revenue of $64.51, per LSEG. The company’s revenue increased 16% year over year in the quarter, and its net income rose 11% during the ******* compared to the year-ago quarter. But

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also called for revenue to be in the range of $68.1 billion to $69.1 billion for the current quarter, falling short of the $69.83 billion expected by analysts surveyed by LSEG. That forecast led shares to slip nearly 4% in premarket trading, despite the company’s strong earnings performance. The stock’s up 15% this year. Analysts from several major firms — including JPMorgan, Bank of America and Morgan Stanley — kept their overweight or buy-equivalent ratings on the stock after the earnings release. Here’s where some of them stand: Bank of America: Reiterated buy and $510 price target, implied 17.9% upside Barclays: Reiterated overweight and $475 price target, implied 9.8% upside Bernstein: Reiterated outperform and raised price target from $500 to $511, implied 18.1% upside Citi: Reiterated buy and $497 price target, implied 14.9% upside Evercore ISI: Reiterated outperform and $500 price target, implied 15.6% upside JPMorgan: Reiterated overweight and lowered price target from $470 to $465, implied 7.5% upside Morgan Stanley: Reiterated overweight and raised price target from $506 to $548, implied 26.7% upside Wells Fargo: Reiterated overweight and $515 price target, implied 19.1% upside Analysts who walked away from the quarterly print enthusiastic about

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’s future returns noted the company’s already strong demand trends and eventual dominance in artificial intelligence-related technologies. “Demand signals remain strong … but supply constraints continue to limit growth in the GenAI-related businesses,” Morgan Stanley analyst Keith Weiss said in a Thursday note. “That said, with management confident in a 2H capacity ramp and MSFT trading at 25X CY26 GAAP P/E, investors should see rewards for waiting.”

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is “by far the best positioned” software company to build a large and durable generative AI-enabled enterprise software business, and best-positioned to gain IT wallet share with those solutions, Weiss added. Weiss, like many analysts, noted that

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management expects the company’s generative AI revenue to surpass a $10 billion run-rate in the second quarter of next year, which should drive an acceleration in overall Azure revenue and stabilize

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’s M365 Commercial Cloud business. That would be the company’s fastest ever AI-related revenue growth rate. Evercore ISI analyst Kirk Materne cited the AI run-rate expectations heading into next year as a reason to be confident about the megacap tech’s ability to deliver strong top- and bottom-line growth. “We see weakness in the shares being a buying opportunity … we believe the long-term trends in the Commercial business remain intact as MSFT continues to take share in Cloud and its AI services continue to scale,” Materne said in a note to clients. Citi similarly said it is “buyers of the pullback” and expects a more positive set-up into the following quarter’s results as

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ramps up its AI revenue. MSFT YTD mountain

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performance this year. Barclays, which has one of the lowest price objectives on Wall Street, said it sees

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shares being “range bound” in the short term. Analyst Raimo Lenschow noted that second-quarter Azure growth guidance of between 31% and 32% was at the lower end of expectations, but said headwinds are likely temporary. “Investors needs to have ****** that the ongoing high Capex investments (~$20bn including leases in Q1) will turn into meaningful revenue in the future,” he said in a note to clients. “We are convinced, but can understand how the market may want to see more tangible results.”

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#Wall #Street #******** #confident #Microsofts #story #weak #guidance #buy #dip

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