Microsoft stock price target raised to $650 by UBS on Azure growth

Investing.com - UBS raised its price target on Microsoft (NASDAQ:MSFT) to $650.00 from $600.00 while maintaining a Buy rating following the company’s quarterly results. The tech giant, now valued at nearly $4 trillion, trades at a P/E ratio of 41.2 and is currently near its 52-week high. According to InvestingPro analysis, Microsoft is trading above its calculated Fair Value.

Microsoft reported 39% constant currency Azure growth, which UBS analyst Karl Kierstead described as a "material 4-point Azure growth rate beat" for the second consecutive quarter.

The company posted total revenue growth of 17% in constant currency, which UBS characterized as "extraordinary" given Microsoft’s scale, along with better-than-expected margin performance.

UBS highlighted Microsoft’s "stellar" backlog and bookings growth of 35% and 30% respectively, calling the quarterly performance "as clean as Microsoft quarters get."

While Microsoft attributed the Azure upside primarily to non-AI demand, especially large enterprise on-premises to Azure workload migrations, UBS noted the two-quarter acceleration in Azure growth from 31% to 39% raises questions about whether Azure is receiving an "incremental boost from Microsoft standing up materially more GPU infrastructure."

In other recent news, Microsoft reported a strong performance in its fourth-quarter fiscal 2025 earnings, with total revenue reaching $76.4 billion, representing a 17% year-over-year growth in constant currency. This exceeded analyst expectations of $73.8 billion. The company’s Azure cloud services showed significant growth, with a 39% year-over-year increase that surpassed both the company’s guidance and market expectations. This robust performance led several analyst firms to raise their price targets for Microsoft. DA Davidson increased its target to $650, highlighting the acceleration in Azure’s growth. Stifel also raised its price target to $650, noting Microsoft’s efficiency in cost management and operating expenses. Cantor Fitzgerald adjusted its target to $639, while Mizuho (NYSE:MFG) set a new target at $625, both citing the strong Azure performance. Additionally, Microsoft announced plans to increase its capital expenditure by at least 50% compared to the previous year, amounting to over $30 billion for the current quarter.

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