Latest news with #Microsoft365CommercialCloud
Yahoo
25-06-2025
- Business
- Yahoo
Microsoft's $100B AI Bet: Why Wells Fargo Says This Rally's Just Getting Started
Wells Fargo just raised its price target on Microsoft (NASDAQ:MSFT) to $585about 19% above where the stock closed Tuesday. While the stock is hovering near all-time highs, analyst Michael Turrin argues that the AI story here is still in its early innings. Microsoft has already scaled its AI segment to $13 billion in annual recurring revenueits fastest ramp everand Turrin thinks this trajectory could take total AI revenue to $100 billion by fiscal 2029. The bank maintains an overweight rating, citing Microsoft's edge across enterprise IT spend and its ability to keep expanding margins even in a tighter market. Warning! GuruFocus has detected 6 Warning Sign with MSFT. What's fueling that optimism? Copilot. Microsoft's AI assistant could be a key revenue unlock in the quarters ahead. Turrin expects Copilot to hit critical mass by next year, potentially generating $12 billion in recurring revenue on its own. His model assumes that just 10% of Microsoft 365 Commercial Cloud's 430 million addressable users adopt Copilotat a 20% average discountto deliver a $10 billion run rate. It's not a moonshot either. With generative AI embedded deeper into daily workflows, this adoption curve could steepen faster than most are modeling. Microsoft is already up 16% in 2025, and most analysts aren't backing down. LSEG data shows 55 out of 62 analysts rate it a buy or strong buy. While some may balk at the valuation, Wells Fargo thinks the AI flywheel is only getting started. Microsoft's scale, distribution, and enterprise lock-in give it a launchpad that's hard to replicateand if Copilot hits its stride, investors may look back at today's price as just another pit stop. This article first appeared on GuruFocus.
CNBC
25-06-2025
- Business
- CNBC
Wells Fargo hikes Microsoft price target, says AI business could reach $100 billion in revenue
It's still early days for Microsoft's artificial intelligence business, according to Wells Fargo. The bank reiterated its overweight rating on the technology giant and raised its price target to $585 from $565. This updated forecast is approximately 19% higher than where shares closed on Tuesday. "We still see a bright future ahead for Microsoft, driven by continued growth prospects in huge categories of IT spend, ability to further monetize strong positioning in multiple end markets, and a financial profile that continues to exhibit durable margin expansion," wrote Wells Fargo analyst Michael Turrin. "We acknowledge shares are trading near historical highs, but think this is justified given its early AI lead and strong incumbent position in a tight market, esp. favorable in the current environment." MSFT YTD mountain MSFT year to date In his upside case, Turrin believes that Microsoft's artificial intelligence business could reach $100 billion in revenue by fiscal year 2029. Microsoft has already demonstrated a history of success in this aspect by scaling its AI business to $13 billion in annual recurring revenue in less than three years, making it its "fastest product ramp ever." Turrin also expects a growing emphasis ahead on Copilot, Microsoft's AI assistant. In particular, he expects the application to reach critical mass by next year and over time bring in $12 billion in annual recurring revenue. "Across the Microsoft 365 Commercial Cloud business we assume a total addressable population of 430M users between all user tiers," the analyst wrote. "From this, we note that MSFT would only need to achieve ~10% adoption rate to reach the $10B annualized revenue run-rate mark, which also assumes an average ~20% discount." Microsoft stock has rallied 16% in 2025. Most analysts are bullish on Microsoft. LSEG data shows 55 of the 62 who cover the stock rate it a buy or strong buy.
Yahoo
28-04-2025
- Business
- Yahoo
Microsoft Seen Well-Positioned Ahead of Q3 Earnings, Here is Why?
April 28 - Microsoft (NASDAQ:MSFT) heads into its fiscal third-quarter earnings report on April 30 with a "de-risked" outlook, according to Jefferies, which cited easing comparisons and favorable foreign exchange moves. Analyst Brent Thill said in a Sunday note that he expects Microsoft's revenue to climb 11% year over year, aided by a slightly easier comparison and currency tailwinds. Thill added he anticipates the company will issue cautious guidance for the fiscal fourth quarter, partly reflecting broader macroeconomic uncertainty. Warning! GuruFocus has detected 1 Warning Sign with MSFT. Jefferies maintained a "Buy" rating on Microsoft with a $475 price target, pointing to the company's consolidation strategy and what it called an attractive valuation at 24 times calendar 2026 earnings estimates, a discount compared to peers. Potential positives for the upcoming report include strength in Microsoft 365 Commercial Cloud and Copilot, as well as easing capital expenditure trends. Early earnings results from other technology firms have also been more resilient than expected, Jefferies noted. However, growth in Microsoft's Azure unit may land at the lower end of guidance ranges, as it has in two of the past three quarters, which could temper sentiment, Thill warned. Analysts, on average, forecast Microsoft to post earnings of $3.22 per share on $68.43 billion in revenue. This article first appeared on GuruFocus.
Globe and Mail
17-04-2025
- Business
- Globe and Mail
Why Morgan Stanley Lowered Growth Forecasts for Microsoft (MSFT)
Investment firm Morgan Stanley has slightly lowered its growth forecasts for tech giant Microsoft (MSFT) due to continued economic uncertainty. Still, the firm believes that Microsoft is well-positioned for long-term success, especially in artificial intelligence. Nevertheless, Azure's expected growth for the third quarter of Fiscal Year 2025 was reduced from 31.5% to 31%, and fourth-quarter growth was cut from 32% to 30%. For Microsoft 365 Commercial Cloud, Morgan Stanley now expects 13.5% growth in Q3 (down from 14%) and 12% in Q4 (down from 13%). Stay Ahead of the Market: Discover outperforming stocks and invest smarter with Top Smart Score Stocks. Filter, analyze, and streamline your search for investment opportunities using Tipranks' Stock Screener. As a result, Microsoft's stock is down at the time of writing. Over the past year, its share price has dropped by 8%, while the broader large-cap software sector is up about 19%. This has caused some investors to worry. Morgan Stanley analysts, led by five-star analyst Keith Weiss, said that economic uncertainty is causing customers to delay big software purchases. They also pointed to slower-than-expected progress in Microsoft's partner network and the rollout of its AI tool, Copilot, as reasons for the lower estimates. However, even with these near-term challenges, Morgan Stanley remains positive on Microsoft's AI future. Indeed, in a recent CIO survey, 35% said that Microsoft is most likely to gain the largest share of AI spending in 2025. In newer AI areas like virtual agents, 32% of CIOs plan to use Microsoft, thanks to the company's strong position with Microsoft 365 Copilot. Is MSFT Stock a Buy? Overall, Microsoft stock has a Strong Buy consensus rating among 35 Wall Street analysts. That rating is based on 32 Buys and three Holds assigned in the last three months. Furthermore, the average MSFT price target of $509.18 per share implies 32.5% upside potential. Disclaimer & Disclosure Report an Issue
Yahoo
16-04-2025
- Business
- Yahoo
Microsoft Target Slashed to $472 as Demand Slips, but AI Bet Keeps Bulls Hopeful
Morgan Stanley reduced its price target on Microsoft (MSFT, Financials) to $472 from $530, citing weakening demand trends and cautious investor sentiment. The firm maintained its Overweight rating on the stock, with the revised target implying a potential upside of more than 22% from the prior closing price. Warning! GuruFocus has detected 1 Warning Sign with MSFT. In a note to clients, analysts at Morgan Stanley said Microsoft shares have lagged behind peers in the large-cap software sector amid a wall of worry over macroeconomic and operational challenges. Slowing momentum in core segments such as Azure and Microsoft 365 was flagged as a key factor behind the downgrade. The analysts projected Azure revenue growth of 31% in constant currency for the March quarter, down from earlier expectations of a stronger rebound in the second half. They now expect further deceleration of 100 basis points in the June quarter. Growth forecasts for Microsoft 365 Commercial Cloud were also revised downward to 13.5% for the third quarter from a prior estimate of 14%, with the team attributing the slowdown to muted adoption of Copilot and lengthening sales cycles. Feedback from Microsoft's channel partners pointed to continued execution issues and a more cautious approach by customers toward large-scale technology investments, Morgan Stanley said. The firm also anticipates further downside risk to consensus earnings estimates, projecting a 1.4% reduction in forecasts for fiscal year 2025 and a 5.1% decline for fiscal year 2026. Despite these near-term challenges, Morgan Stanley emphasized that the company's long-term positioning in generative artificial intelligence remains solid. The analysts believe Microsoft shares are approaching a valuation floor and see the long-term risk-reward as favorable, estimating a 3-to-1 upside-to-downside ratio at current levels. Additionally, the note highlighted that every 1% decrease in capital expenditures could result in a 1.5% increase in free cash flow, potentially offsetting some of the pressure from softer demand trends. This article first appeared on GuruFocus. Sign in to access your portfolio
