Goldman Sachs expects Nvidia ’beat and raise,’ lifts price target to $240
Investing.com - Stifel has reduced its price target on Microsoft (NASDAQ:MSFT) to $640 from $650 while maintaining a Buy rating on the stock. The new target remains above Microsoft’s current trading price of $541.55, but below the Street’s high estimate of $710. InvestingPro data shows Microsoft is currently trading above its Fair Value, with a P/E ratio of 39.52.
The adjustment follows Microsoft’s first-quarter results, which showed 39% constant-currency Azure growth at the low end of investor expectations, causing shares to fall approximately 4% in after-hours trading. Despite this setback, Microsoft’s overall revenue reached $281.72 billion with 14.93% growth over the last twelve months.
Stifel cited persistent Azure capacity shortages as a key concern, with Microsoft guiding for 37% constant-currency Azure growth in the second quarter, which falls toward the bottom of investor targets. InvestingPro analysis reveals Microsoft’s PEG ratio of 2.42 suggests the stock is trading at a premium relative to its growth rate. Pro Research Reports available for Microsoft and 1,400+ other stocks provide deeper insights into such valuation metrics.
Microsoft is addressing these capacity issues by significantly increasing its fiscal year 2026 capital expenditure growth to more than 60%, with spending focused on compute infrastructure. Stifel now models $148 billion in capital expenditures, up 68% year-over-year, compared to its previous estimate of $120 billion.
The research firm expects this accelerated spending, combined with increased operating expenses for high-priced AI talent, will compress operating margins throughout fiscal year 2026, ending at approximately 43%, below the first quarter’s 48.9% level.
In other recent news, Microsoft reported its earnings for the first fiscal quarter of 2026, surpassing market expectations with notable growth in its cloud and AI sectors. The company achieved earnings per share of $4.13, exceeding the forecasted $3.66, and reported revenue of $77.7 billion, surpassing the anticipated $75.32 billion. This robust performance was driven largely by Microsoft’s Azure cloud services, which saw a 39% growth in constant currency, aligning with investor expectations. Raymond James, however, lowered its price target for Microsoft to $600, citing increased capital expenditure needs related to capacity, while maintaining an Outperform rating. Similarly, BMO Capital adjusted its price target to $625, noting Azure’s growth exceeded guidance but fell slightly short of buy-side expectations. Truist Securities maintained a Buy rating with a price target of $675, highlighting the strong performance across all segments and a significant 111% year-over-year increase in commercial bookings. These recent developments reflect varied analyst perspectives while underscoring Microsoft’s strong market position.
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