Microsoft’s (MSFT) fiscal Q2 earnings are expected to benefit from the continued strength of Azure and M365, offset by weaker PC shipments, BofA Securities said in a note to clients Thursday.
Microsoft is set to release its fiscal Q2 results after market close on Jan. 30.
BofA said it expects an upside of 1% in constant currency to its Q2 revenue forecast of $60.9 billion, with currency anticipated to give a 2% point tailwind to Q2 growth compared with projections of 1% heading into the period.
“Accelerating [average selling price] growth from M365 Copilot attach is likely to drive Office growth toward 20%,” BofA said.
For Azure, the firm said it expects a 1% upside to its estimated growth of 26.5% in constant currency amid feedback suggesting “healthy continued migration of new workloads” and “sustaining adoption of the Microsoft security stack.”
“In summary, we expect total revenue growth to accelerate to solid high teens from current mid-teens level in a reasonable upside case,” BofA said.
BofA raised the price objective for Microsoft to $450 from $430 and maintained the buy rating.