Microsoft

Microsoft (MSFT) faces negative investor sentiment due to concerns about gross margins, capital expenditures, artificial intelligence monetization, and its OpenAI relationship, Morgan Stanley said in an earnings preview on Thursday. But despite short-term supply constraints in AI infrastructure, Microsoft’s ability to deliver steady core Azure consumption puts it in a positive setup for outperformance in the upcoming quarters, the analysts said. “We expect to see modest upside in F1Q outperformance, but see the larger lever for stock outperformance being greater investor confidence in the F2H Azure acceleration,” Morgan Stanley said. The firm said investors have reduced their expectations for Microsoft 365 Copilot due to limited financial visibility and competitive pressures. However, it is showing positive signs of adoption and is viewed as a potential multi-year driver for average revenue per user expansion. Morgan Stanley expects the company’s capital expenditures to remain high as they are aligned with future growth in […]

So-called “platform” stocks, such as Microsoft and Snowflake, are currently the most attractive part of the AI sector as the sector continues to evolve, according to Goldman Sachs. In a recent note, a team of Goldman analysts led by Ryan Hammond revisited its “four phases of AI” investment hypothesis and examined which stocks would offer the best bet in coming months. To recap, Goldman considers Nvidia (NVDA), as the “clearest near-term AI beneficiary,” to encapsulate Phase 1. Phase 2 comprises firms focused on AI infrastructure, including semiconductor firms, cloud providers, data center REITs, hardware and equipment companies, security software stocks and utilities companies, according to Goldman, which gave this cohort the mnemonic GSCBAIP2. Phase 3 includes companies with the potential to monetize AI – primarily via software and IT services (GSCBAIP3). Phase 4 includes companies with the biggest potential earnings boost because of the productivity gains it is hoped AI

Slow AI adoption may be a bigger drag on Microsoft performance than previously expected. Oppenheimer’s Timothy Horan says in a report that Open AI losses for Microsoft could be in the $2 billion-$3 billion range in 2025 and may mean that current consensus estimates for revenue and EPS are also too high. “We reiterate the Street is likely overestimating near-term AI revenues as enterprise adoption and infrastructure remains a bottleneck,” Horan says, who downgrades the its rating to perform from outperform. This may be only a near-term issue however, since Microsoft is investing in a once-in-a-generation technology which could deprioritize expanding margins in the short-term.

Microsoft had good news for investors as the software giant announced plans for an increased shareholder payout as well as a new share buyback program. It said late Monday that it is increasing its quarterly dividend by 10% compared with last quarter, to 83 cents a share. The dividend is payable on Dec. 12 to shareholders of record on Nov. 21. The board of directors at the software giant also approved a new share repurchase program of up to $60 billion. The program has no expiration date and can be terminated at any time. Share buybacks are seen as good for shareholders as the amount of outstanding shares decreases, which tends to increase the nominal value per share. Microsoft reported fourth-quarter results on July 30 that largely matched analysts’ estimates. Shares, however, fell immediately after the release, reflecting the market’s high expectation of the legacy software company. The stock was

Microsoft (MSFT)-backed OpenAI is in talks with venture capitalists to raise billions of dollars in a new funding round that could value the company at more than $100 billion, The Wall Street Journal reported Wednesday, citing unnamed people familiar with the matter. Joshua Kushner’s Thrive Capital is leading the investment round with about $1 billion and will be the biggest funding round since Microsoft invested $10 billion in the ChatGPT maker in early 2023, the news outlet reported.

By Brian Swint Microsoft, one of the three biggest companies by market capitalization, is only just starting to reap the benefits of artificial intelligence. That’s the view of analysts at Wedbush led by Dan Ives, who raised their price target to $550 from $500 in a note published Sunday and maintained an Outperform rating. While Ives is known for his bullish views on technology stocks, the analysts have based their stance on research conducted with Microsoft customers for insight into their future spending plans. “The stock still has yet to price in what we view as the next wave of cloud and AI growth coming to the Redmond story with a strong competitive cloud edge vs. Amazon especially and Google,” said Wedbush. “It has become crystal clear to us that the monetization opportunities around deploying AI and ChatGPT in the cloud is a transformational opportunity.” Microsoft mainly uses AI in

Microsoft’s (MSFT) trajectory for growth and leading position in artificial intelligence is encouraging, RBC Capital Markets said in a note Friday. “Microsoft continues to invest aggressively in AI, given the market opportunity and its early leadership,” RBC said. This strategy contrasts with Microsoft’s previous approach to cloud computing when it was competing with Amazon.com’s (AMZN) Amazon Web Services. Despite expected increases in capital expenditures that could impact profit margins, Microsoft is viewed as aligning with market demand and actively seeking to mitigate costs, RBC said. “Advances like GPT-4o, which is more efficient, and Maia (custom AI silicon) will help drive down the cost curve.” Additionally, cloud computing and Copilot feature show promise, while security and gaming also have growth opportunities. Microsoft’s strategic focus on software/services in gaming aims to enhance margins and reduce cyclicality. The company believes customers will build their own AI models, not just from scratch, but fine-tune

By Tom Dotan Microsoft said it is investing billions of dollars on artificial intelligence in Wisconsin, the latest stop in a global spending spree to build AI infrastructure and calm fears about the powerful technology. President Biden is scheduled to be in Mount Pleasant, Wis., on Wednesday along with Microsoft President Brad Smith to announce the $3.3 billion investment in a new data center there and training programs to educate locals about AI jobs in manufacturing. The announcement is the latest in a series of large investments the company has unveiled in the U.S., Europe and Asia to expand the reach of its AI network. Microsoft said the new site would initially create 2,300 construction jobs and eventually as many as 2,000 data center jobs. Microsoft said it is also investing in a new AI lab at the University of Wisconsin Milwaukee campus to train workers to use AI technology.

Microsoft’s (MSFT) collaboration with Conduent (CNDT) underscores the “unique AI leadership position” held by the software giant, Macquarie said in a report emailed Tuesday. Conduent on Monday announced an initiative with Microsoft aimed at using the Azure AI platform to improve healthcare claims management, customer service, and fraud detection. “We think Microsoft’s AI strategy uniquely positions it as the ultimate adoption beneficiary,” the Macquarie analysts said. Since its January 2023 investment in OpenAI, the company has steadily advanced its AI deployment, moving from testing to broader availability, Macquarie said, adding that “we view this recognition by Conduent as significant, as it highlights the importance of safety to a successful initial AI deployment.” Microsoft’s continued prioritization of its Azure platform has driven significant revenue growth, with Azure AI Services estimated at $4.1 billion in annualized run rate revenue, Macquarie said. Conduent plans to leverage Microsoft’s Azure AI platform across three pilots,

The following is a summary of the Microsoft Corporation (MSFT) Q3 2024 Earnings Call Transcript: Financial Performance: Microsoft reported $61.9 billion in revenue for Q3, a 17% increase from previous year’s period. They posted strong earnings per share of $2.94, a 20% increase year-over-year. Revenue gains were largely driven by Azure commitments, resulting in commercial bookings increasing 29% and 31% in constant currency. Microsoft’s cloud business recorded a revenue of $35.1 billion, growing at 23%, with gross margin percentage decreasing slightly to 72%. Operating expenses grew by 10%, with operating income increasing by 23%, and operating margins rising approximately 2 points year-over-year to 45%. Business Progress: Over 65% of Fortune 500 companies are now using Azure’s OpenAI service, indicating a growing business user base. Microsoft’s Copilot system is gaining traction, with plans to create Copilot-like scenarios in every business system to enhance enterprise-wide efficiency. Diablo IV’s integration into Game Pass

Technology giant Microsoft Corporation (NASDAQ:MSFT) reported third-quarter financial results that saw revenue and earnings per share beat estimates from analysts. Analysts are praising the company’s growth of artificial intelligence platforms. The MSFT Analysts: Oppenheimer analyst Timothy Horan has an Outperform rating and price target of $450. Raymond James analyst Andrew Marok has an Outperform rating and raises the price target from $450 to $480. Goldman Sachs analyst Kash Rangan has a Buy rating and raises the price target from $450 to $515. Morgan Stanley analyst Keith Weiss has an Overweight rating and price target of $520. Wedbush analyst Daniel Ives has an Outperform rating and price target of $500. Bank of America analyst Brad Sills has a Buy rating and price target of $480. JPMorgan analyst Mark Murphy has an Overweight rating and raises the price target from $440 to $470. BMO Capital analyst Keith Bachman has an Outperform rating and price

Microsoft (MSFT) latest Q3 results showcased yet another strong quarter with impressive outcomes across the board, Wedbush said in a report Friday. Microsoft Azure’s growth soared at 31%, surpassing both the Wall Street’s estimate of 29% and the company’s own guidance of 28%, driven by strong demand for their updated tech stack. “Copilot conversions continue exploding with partners/customers lining up for further Copilot deployments to increase efficiencies and profitable growth with more use cases seen across the product portfolio as the AI Revolution heats up,” Wedbush said. In Q3, Microsoft’s total revenues reached $61.86 billion, surpassing estimates, driven by successful AI integration, the firm said. Looking ahead, Microsoft anticipates solid revenue growth for Q4, “as more customers see increased use cases with MSFT’s AI technology stack to further expand profitable growth” while generating greater efficiencies across operations despite increasing investments, Wedbush said. Microsoft also issued robust guidance for 2025, anticipating