Microsoft stock price target raised to $650 from $550 at BMO Capital

Investing.com - BMO Capital raised its price target on Microsoft (NASDAQ:MSFT) to $650.00 from $550.00 on Thursday, while maintaining an Outperform rating on the stock. The tech giant, currently valued at $3.81 trillion, trades near its 52-week high of $518.29. According to InvestingPro analysis, Microsoft appears slightly overvalued at current levels, with a P/E ratio of 39.31.

The price target increase follows what BMO Capital described as "an impressive quarter across the board" for Microsoft, highlighted by Azure’s 39% year-over-year constant currency growth in the June quarter.

Microsoft also provided guidance for 37% year-over-year constant currency Azure growth for the September quarter, according to BMO Capital’s analysis.

The firm noted that Microsoft grew operating income by 22% year-over-year in constant currency terms, benefiting from only 5% year-over-year constant currency operating expense growth, despite having a richer cloud mix.

BMO Capital indicated it prefers Microsoft to other large-cap software names including Oracle (NYSE:ORCL), SAP, and Salesforce (NYSE:CRM), citing the "breadth of portfolio including AI offerings and solid margin performance."

In other recent news, Microsoft reported strong fiscal fourth-quarter results, with Azure and other Cloud Services revenue growing by 39%, which exceeded high investor expectations. This growth was highlighted by both Oppenheimer and Wolfe Research, with Oppenheimer raising its price target for Microsoft to $630 and Wolfe Research increasing it to $675, both maintaining an Outperform rating. Morgan Stanley (NYSE:MS) also raised its price target to $582, citing Microsoft’s durable margins, which saw an increase in operating margins by 100 basis points year-over-year. KeyBanc upgraded Microsoft’s stock rating to Overweight, setting a price target of $630, due to significant acceleration in the Azure cloud segment.

Additionally, the UK’s Competition and Markets Authority (CMA) has raised concerns about Microsoft’s and Amazon (NASDAQ:AMZN)’s dominant position in the cloud computing market, suggesting that their market status might negatively affect competition. The CMA is considering whether to designate the companies with strategic market status, potentially imposing tailored conditions on their operations. These developments reflect the ongoing scrutiny and competition in the cloud services industry.

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