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Investing.com - Wolfe Research raised its price target on Microsoft (NASDAQ:MSFT) to $675.00 from $650.00 on Thursday, while maintaining an Outperform rating on the stock. The tech giant, currently valued at $3.81 trillion, maintains a "GREAT" financial health score according to InvestingPro analysis.
The research firm cited Microsoft’s strong fourth-quarter fiscal 2025 results, which featured Azure cloud revenue growth of 39% at constant currency, exceeding guidance by 4.5 percentage points. The stock rose approximately 8% in after-hours trading following the earnings announcement. This performance aligns with Microsoft’s broader growth trajectory, with revenue increasing 14.1% over the last twelve months to $270 billion.
Microsoft shares have gained 22% year-to-date, outperforming the iShares Expanded Tech-Software Sector ETF (IGV), which is up 13% during the same period. The company currently trades at approximately 30 times its calendar year 2026 estimated price-to-earnings multiple. According to InvestingPro analysis, Microsoft appears to be trading above its Fair Value, with the stock currently near its 52-week high of $518.29.
Wolfe Research’s new $675 price target represents a 40 times calendar year 2026 estimated P/E multiple, which is about a 50% premium to Microsoft’s mega-cap peers. The firm justified this premium valuation by pointing to Microsoft’s "best-in-class fundamentals" and faster revenue and earnings growth compared to peers.
The research firm expects Microsoft’s strong business fundamentals and artificial intelligence tailwinds to persist, potentially driving positive revenue and earnings per share revisions into fiscal year 2026.
In other recent news, Microsoft reported fourth-quarter earnings for fiscal year 2025 that exceeded Wall Street expectations. The company achieved earnings per share of $3.65, surpassing the forecast of $3.37, and reported revenue of $76.4 billion, beating the estimated $73.79 billion. Barclays (LON:BARC) responded to these strong results by raising its price target for Microsoft to $625, maintaining an Overweight rating. The upgrade was attributed to a 3.5% revenue beat and a 7% operating profit beat, with margins ahead by approximately 180 basis points.
Morgan Stanley (NYSE:MS) also raised its price target for Microsoft to $582, citing durable operating margins, which reached 45.6% by the end of FY25. KeyBanc upgraded Microsoft’s stock rating from Sector Weight to Overweight, driven by significant growth in the Azure cloud segment, which saw a 39% increase in constant currency by the end of the fiscal year. This growth marked an eight percentage point increase over the second half of the year. These developments highlight the positive outlook analysts have for Microsoft’s financial performance and market position.
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