Microsoft stock set for Q4 earnings with focus on Azure growth and AI revenue

Investing.com - Bernstein SocGen Group has reiterated an Outperform rating and $540.00 price target on Microsoft (NASDAQ:MSFT) ahead of the company’s fourth-quarter fiscal 2025 earnings report. The tech giant, currently trading near its 52-week high of $518.29 and commanding a market cap of $3.81 trillion, appears overvalued according to InvestingPro Fair Value analysis.

Microsoft is scheduled to release its quarterly results on Wednesday after market close, following what Bernstein described as a "surprisingly strong" third quarter that featured solid overall performance and significant Azure cloud service growth. The company maintains strong fundamentals with a "GREAT" financial health score according to InvestingPro, supported by 14.13% revenue growth in the last twelve months.

The firm noted that while investor sentiment has improved, questions persist regarding Azure growth, capital expenditures, the OpenAI partnership, and overall fundamentals, with the upcoming earnings expected to validate Azure growth and potentially show slowing capital spending.

Bernstein identified four key areas of focus for investors beyond the reported numbers: the AI revenue run rate exiting Q4, Azure performance and capital expenditures, additional commentary on the OpenAI partnership, and high-level guidance for fiscal year 2026.

The firm also suggested that foreign exchange factors could provide more of a tailwind than expected, pointing to the negative impact of currency effects seen in SAP’s second-quarter results as evidence of this potential trend.

In other recent news, Microsoft is set to release its quarterly earnings report, concluding its fiscal year, with analysts from Cantor Fitzgerald maintaining an Overweight rating and a price target of $581. KeyBanc has also reiterated its Sector Weight rating, noting positive indicators from value-added reseller checks ahead of the earnings announcement. Stifel has increased its price target for Microsoft from $500 to $550, maintaining a Buy rating due to anticipated growth in enterprise spending and strong demand for generative AI, which could drive Azure cloud growth beyond the company’s guidance. Additionally, Microsoft has launched a new AI-powered "Copilot Mode" for its Edge browser, designed to enhance browsing capabilities by organizing tasks and queries without the need to switch tabs. Meanwhile, Microsoft is investigating a potential leak in its cybersecurity alert system that may have allowed Chinese hackers to exploit vulnerabilities in its SharePoint service. The investigation focuses on whether the Microsoft Active Protections Program contributed to the global exploitation of these vulnerabilities. These developments come as the company navigates both technological advancements and security challenges.

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