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On Thursday, Mizuho (NYSE:MFG) Securities analyst Gregg Moskowitz increased the price target for Microsoft Corporation (NASDAQ:MSFT) to $500 from the previous $475, while reiterating an Outperform rating on the stock. This adjustment follows Microsoft’s reported financial results for the third fiscal quarter, which surpassed analysts’ expectations. With a market capitalization of $2.94 trillion and a P/E ratio of 31.34, InvestingPro analysis suggests Microsoft is currently trading near its Fair Value.
Microsoft announced total revenue of $70.1 billion, marking a 15% year-over-year growth on a constant currency basis, which exceeded the Street’s estimate of $68.2 billion. The company maintains an impressive 69.41% gross profit margin, according to InvestingPro data. Azure, Microsoft’s cloud computing service, was a standout performer with a 35% year-over-year growth in constant currency, surpassing management’s own guidance of 31%-32%.
The firm’s strong performance is not anticipated to be an isolated event, as management has set a target for Azure’s revenue growth at 34-35% year-over-year in constant currency for the fourth fiscal quarter. This forecast is significantly higher than the Street’s projection of approximately 31.5% and exceeds both Mizuho’s and buy-side expectations.
Moskowitz expressed his admiration for Microsoft’s robust results and forward-looking guidance, despite the challenging macroeconomic environment. He also emphasized confidence in Microsoft’s medium-term revenue growth opportunities, citing the company’s adoption and monetization of tangible GenAI as a key driver for bullish sentiment on the stock.
In other recent news, Microsoft and Meta Platforms (NASDAQ:META) both reported quarterly earnings that exceeded expectations, significantly impacting the tech sector. Microsoft’s strong performance was largely driven by its Azure cloud services, which saw notable growth. Truist Securities maintained a Buy rating on Microsoft, setting a price target of $600, while Piper Sandler and Jefferies also raised their price targets to $475 and $550, respectively, reflecting confidence in Microsoft’s cloud and AI capabilities. Guggenheim, however, maintained a Neutral rating, noting the company’s strong cash flow and monopolistic position. Meta also impressed investors with its first-quarter results and increased its full-year forecast for capital expenditures, focusing on AI investments. This optimism around AI positively influenced related stocks such as Arista Networks (NYSE:ANET) and Broadcom (NASDAQ:AVGO). Meanwhile, Apple (NASDAQ:AAPL) faced a setback as its shares dropped following a federal judge’s ruling that the company violated a court order regarding its App Store. Despite these developments, tech giants like Amazon (NASDAQ:AMZN) and Nvidia (NASDAQ:NVDA) saw gains, benefiting from the overall positive sentiment in the tech sector.
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