Buy Rating Affirmed for Microsoft on Azure Growth and Strategic Gen-AI Investments

Kash Rangan, an analyst from Goldman Sachs, reiterated the Buy rating on Microsoft (MSFT – Research Report). The associated price target remains the same with $450.00.

Kash Rangan has given his Buy rating due to a combination of factors including Microsoft’s strategic investments that are expected to bolster Azure’s growth and contribute to market share gains. Rangan’s confidence is further supported by the insights from the biannual CIO Survey and a Non-Deal Roadshow (NDR), which suggest Microsoft is on track to meet the forecasted revenue growth of 15%, with Azure anticipated to grow at 28% in USD/CC terms. Additionally, Microsoft’s ability to scale Generation-Artificial Intelligence (Gen-AI) revenues without significantly impacting its profitability profile supports the positive outlook on the stock.

Moreover, Rangan notes that despite Microsoft’s increased capital expenditures to satisfy rising demand, the investment cycle is progressing more efficiently compared to previous ones. The company’s growing share of total cloud spending among its peers is indicative of its strength. With a focus on productivity and innovation, Microsoft is well-positioned to expand its market share amidst a competitive IT environment. Azure’s momentum as a primary driver of Gen-AI spending, alongside the expected contribution from Copilots in Office and Security by calendar year 2025, further underpins the Buy rating, particularly as role-specific Copilots are projected to accelerate near-term adoption.

According to TipRanks, Rangan is a 5-star analyst with an average return of 9.1% and a 57.92% success rate. Rangan covers the Technology sector, focusing on stocks such as Adobe, Microsoft, and Salesforce.

In another report released on April 19, TD Cowen also reiterated a Buy rating on the stock with a $455.00 price target.

TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.

Microsoft (MSFT) Company Description:

Microsoft Corp. is a technology company offering an array of software, services, and solutions as well as devices like personal computers, tablets and gaming consoles. It operates through the following business segments:
• Productivity and Business Processes: generates revenue from Office Commercial and Office Consumer offerings, LinkedIn and Dynamics business solutions.
• Intelligent Cloud: includes public, private and hybrid server products and cloud services.
• More Personal Computing: includes Windows licensing, Windows Commercial products and cloud services, Surface devices and PC accessories, gaming business and search advertising revenue.
The company was founded by Paul Gardner Allen and William Henry Gates III in 1975 and is headquartered in Redmond, WA.