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On Thursday, BMO Capital Markets adjusted its outlook on Microsoft Corporation (NASDAQ:MSFT), increasing the tech giant’s price target from $470.00 to $485.00, while reiterating an Outperform rating on the shares. The adjustment follows Microsoft’s reported Azure growth for the March quarter, which exceeded BMO Capital’s projections. According to InvestingPro data, Microsoft, now valued at $2.94 trillion, maintains a "GREAT" financial health score, supported by strong profitability metrics and moderate debt levels.
Keith Bachman, an analyst at BMO Capital, noted that Microsoft’s Azure, the company’s cloud computing service, experienced a year-over-year constant currency (cc) growth of 35%, surpassing their estimate of 31.5%. This performance was attributed to strong demand for both AI and legacy workload solutions. Additionally, Microsoft’s management has provided guidance for Azure’s revenue growth, projecting a 34-35% year-over-year cc increase for the June quarter. This forecast is ahead of the consensus estimates, which were around 32% year-over-year cc growth. The company’s overall revenue growth stands at 15.04%, with total revenue reaching $261.8 billion in the last twelve months.
The Personal Computing Business (PBP) results were also highlighted as outperforming BMO Capital’s expectations. The firm’s positive outlook is bolstered by these results, leading to the decision to raise the price target while maintaining the Outperform rating on Microsoft stock. For investors seeking deeper insights, InvestingPro offers comprehensive analysis including 12+ additional ProTips and detailed valuation metrics, available in the Pro Research Report covering Microsoft and 1,400+ other top stocks.
Bachman’s statement emphasized the factors contributing to Microsoft’s robust performance: "Given improved Azure growth, we are raising our target price to $485 and retain our Outperform rating." This sentiment reflects confidence in Microsoft’s continued growth trajectory and its ability to outperform market expectations.
Investors and market observers will be watching closely to see if Microsoft can sustain its growth momentum in Azure and other segments, as indicated by BMO Capital’s revised price target and optimistic rating.
In other recent news, Microsoft has reported impressive financial results, with its Azure cloud services achieving a 33% year-over-year growth, surpassing analyst expectations. This growth was significantly driven by advancements in artificial intelligence, contributing to Microsoft’s revenue exceeding Wall Street estimates. Following these results, several firms have adjusted their price targets for Microsoft. Wedbush Securities raised its target to $515, citing strong AI growth, while RBC Capital Markets increased their target to $525, highlighting the company’s effective execution in Azure. Similarly, Stifel adjusted their target to $500, emphasizing Microsoft’s control over operating expenses and Azure’s robust performance. Raymond (NSE:RYMD) James also raised their target to $490, noting continued strength in AI demand despite capacity challenges. Meanwhile, KeyBanc maintained a Sector Weight rating, acknowledging Microsoft’s strong quarter but expressing caution about AI investment returns. These developments underscore the positive momentum Microsoft is experiencing in its cloud and AI sectors, as well as investor confidence in its strategic direction.
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