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Investing.com - Piper Sandler maintained its Overweight rating and $650.00 price target on Microsoft (NASDAQ:MSFT) following the company’s recent quarterly results. The tech giant, with its impressive $3.95 trillion market cap, continues to show strong revenue growth of 14.93% over the last twelve months.
Microsoft reported Azure cloud growth of 39% at constant currency during Q1, which fell short of investor expectations of 40% or higher, despite meeting the company’s guidance of 37%. This shortfall, combined with Microsoft’s Q2 Azure growth outlook of 37%, triggered a roughly 3% decline in the stock price after hours. According to InvestingPro data, Microsoft’s RSI suggests the stock is in overbought territory, trading near its 52-week high of $555.45, with a current price of $530.65.
Piper Sandler emphasized that Microsoft’s Azure growth rate is primarily constrained by capacity limitations rather than weakening demand, noting that demand continues to exceed supply. The firm highlighted Microsoft’s plans to accelerate capital expenditure in fiscal year 2026, with increased focus on short-lived assets such as GPUs and CPUs to address immediate capacity constraints.
The investment firm also pointed to positive indicators in Microsoft’s commercial reserved performance obligations (RPO) and commercial bookings, which accelerated to 51% year-over-year and 111% year-over-year growth, respectively.
Piper Sandler maintained its view that Microsoft remains one of the best-positioned platforms to capitalize on incremental artificial intelligence workloads, despite the recent market reaction to Azure growth figures.
In other recent news, Microsoft has reported strong financial results, with its Azure cloud services showing a 39% growth in constant currency during the most recent quarter. Despite facing capacity constraints, Azure’s growth remains robust, with guidance suggesting a 37% increase for the next quarter. Analysts from Oppenheimer have reiterated an Outperform rating, acknowledging the company’s fiscal first-quarter results exceeded consensus estimates. Evercore ISI has raised its price target for Microsoft to $640, noting the impressive demand for Azure and cloud services. Wells Fargo also increased its price target to $700, maintaining an Overweight rating, and highlighted Azure’s performance, which surpassed expectations. KeyBanc continues to hold an Overweight rating, emphasizing ongoing capacity challenges that may affect growth potential. Guggenheim has maintained a Buy rating, focusing on Azure’s traction, anticipated Microsoft 365 Commercial Copilot adoption, and strong Windows performance. These developments reflect the continued investor confidence in Microsoft’s growth prospects despite operational challenges.
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