Key Points
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The company also expects its momentum to continue in the fourth quarter – especially with its focus on artificial intelligence.
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KeyBanc analyst Jackson Ader walked back a downgrade on Microsoft.
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Microsoft (NASDAQ: MSFT) is up nearly 9% to $430.11 on the day.
All thanks to strong earnings with third quarter adjusted EPS OF $3.46 a share on revenue of $70.1 billion. Meanwhile, analysts were only looking for adjusted EPS of $3.22 on revenue of $68.4 billion. Last year, the tech giant posted EPS of $2.94 on revenue of $6.19 billion.
Cloud revenue jumped 20% year over year to $42.4 billion. Its Azure public cloud business revenue rocketed 33% higher, which is up from 31% year over year.
In addition, “Azure Q4 revenue growth is expected to be from 34% to 35% driven by strong demand from our portfolio of services,” said Microsoft CFO Amy Hood. “We expect capex to grow in fiscal year 2026. It will grow at a lower rate than fiscal 2025.”
The company also expects its momentum to continue in the fourth quarter – especially with its focus on artificial intelligence and capacity constraints to help meet demand.
Wall Street’s View of Microsoft
Doubters were quickly silenced by earnings.
KeyBanc analyst Jackson Ader, for example, walked back a downgrade on Microsoft.
“Our downgrade looks pretty foolish right now. No need to hide from it,” he said, as quoted by Barron’s. “While we said it wasn’t a quarter-calling move, the fact is we downgraded two weeks ago and the Company subsequently put up one of its best quarters in recent memory.”
JPMorgan just reiterated its overweight rating on MSFT with a price target of $475.
“Within the AI services portion of Azure, Microsoft was able to bring capacity online faster than expected,” said J.P. Morgan analysts. “So far in FY25, AI services contributed 12% points of growth to Azure in Q1, 13% points in Q2, and now surging to 16% points in Q3.”
Bank of America reiterated its buy rating with a $515 price target, noting, “Q3 results suggest that ROI on capex is coming into view sooner than expected. Capex is peaking, while core Azure growth is accelerating from share gains in cloud and AI tailwinds.”
Wedbush also has an overweight rating with a $515 price target, noting, “We are laser-focused on the AI piece of this MSFT story and all metrics were ahead of expectations, which give us added confidence in the AI Revolution bull thesis for Redmond into the rest of FY25 and beyond as MSFT remains in the driver’s seat in this AI Revolution,” as also quoted by Seeking Alpha.
Other tech stocks are also gaining momentum thanks to Microsoft. Meta (NASDAQ: META) is up 5%, or by $27.50. Nvidia (NASDAQ: NVDA) is up 4.4%, or by $4.81 to $113.70. With the AI story again showing no signs of cooling, tech giants could easily see higher highs.
The post Microsoft Is Up Big on Thursday, Here Is Where Wall Street Experts Think The Stock is Going appeared first on 24/7 Wall St..
