ReElement Technologies stock soars after securing $1.4B government deal
Investing.com -- Morgan Stanley reiterated Microsoft as its “Top Pick” in large-cap software, raising its price target to $650 from $625 after what it called a “powerful start to FY26.”
Analyst Keith Weiss told investors in a note that it would “be aggressive buyers on any pullbacks,” citing accelerating growth, resilient margins, and expanding AI demand.
“Commercial bookings grew 111% year-on-year and current remaining performance obligations (cRPO) accelerated to 35% year-on-year,” Weiss wrote.
He added that Microsoft’s 1Q26 results “exceeded consensus across all three business segments,” producing a roughly 3% total revenue beat and highlighting “strong demand trends.”
Azure revenue rose 39% in constant currency, missing buyside expectations by one percentage point but still reflecting what the analyst described as “growth that is accelerating.”
He noted that “a focus on Azure growth 1 point shy of expectations in a supply-constrained environment seems to miss the point – growth is accelerating.”
Operating margins expanded by 230 basis points year-on-year and came in “230 basis points ahead of consensus,” as Microsoft balanced higher cloud mix with “strong operational controls.”
CFO Amy Hood said demand “again exceeded supply across workloads even as we brought more capacity online.” Morgan Stanley expects supply constraints to persist through fiscal 2026, with capital expenditure forecast to exceed last year’s 58% increase.
The bank stated that Microsoft’s “durability of top-line demand and the potential for further margin expansion” remain underappreciated, viewing the company as “the long-term GenAI winner.”
Weiss concluded, “We would be aggressive buyers on any pullbacks.”