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Investing.com -- Bank of America raised its price target for Microsoft (NASDAQ:MSFT) shares to $585 from $515 in a note Friday ahead of the company’s fiscal fourth-quarter results, citing continued momentum in cloud infrastructure, strong partner feedback, and early signs of traction from its AI Copilot tools.
BofA said partner checks ahead of the July 30 earnings report suggest deal activity in Q4 was “largely in line” with the previous quarter, supporting a “0-1% upside” to its $73.7 billion revenue forecast.
The analysts expect Azure to grow 35.5% year-over-year in constant currency, with “18.0% points from AI,” noting “steady cloud migrations and strength in security and data analytics.”
In Microsoft’s Productivity and Business Processes unit, BofA sees potential for 13% constant currency growth, above its base case of 12.5%.
“Partner feedback suggests stable E3/E5 upgrade activity and ramping Copilot adoption,” the note said. For More Personal Computing, analysts now model 3.4% growth, helped by better-than-expected PC shipments.
Looking ahead, BofA is forecasting fiscal 2026 revenue growth of 14%, in line with fiscal 2025.
While the firm acknowledged downside risk to its 45.5% margin forecast due to rising capital expenditures, it noted that capex is expected to stay “largely consistent as a % of revenue at 31%.”
BofA called Microsoft its “top pick” and said the next catalyst is likely “more evidence that Copilot is becoming more material to growth.” The stock, up 30% since Q3, “trades at a premium versus peers,” but analysts see room for further upside with Azure’s continued strength and AI momentum.