Microsoft Analyst Praises 'Purposeful' AI Moves As Competitors Scramble To Respond

Shares of Microsoft Corp (NASDAQ: MSFT) climbed in early trading on Wednesday, after the Redmond, Washington-based company reported upbeat quarterly results.

Here are some key analyst takeaways from the earnings call:

• Morgan Stanley analyst Keith Weiss reiterated an Overweight rating, while raising the price target from $307 to $335.
• William Blair analyst Jason Ader maintained an Outperform rating on the stock.
• Oppenheimer analyst Timothy Horan reaffirmed an Outperform rating, while raising the price target from $310 to $330.
• Raymond James analyst Andrew Marok reiterated an Outperform rating, while raising the price target from $310 to $320.
• Mizuho Securities analyst Gregg Moskowitz maintained a Buy rating, while raising the price target from $315 to $325.

Check out other analyst stock ratings.

Morgan Stanley

“Amidst a difficult spending environment, Microsoft's differentiated positioning in Public Cloud and Generative AI, along with a unique ability to deliver consolidated solutions, drives shares gains and out-performance against street expectations,” Weiss said in a note.

“Microsoft's initial productization of Generative AI capabilities in solutions like Co-Pilot for Github and Azure OpenAI services have not only garnered positive feedback from customers, but revenues have already started flowing,” he added.

William Blair

“Microsoft reported better-than-expected results for its fiscal third quarter, with solid performance in Microsoft Cloud (up 25%) and nice upside in the MPC segment (where Windows OEM, Gaming, and Advertising all performed above expectations),” Ader wrote in a note.

“Looking into the fourth quarter, while Microsoft continues to feel pressure from the macroenvironment, guidance was nicely above consensus, and management’s tone was much improved versus the prior earnings call,” he added.

Oppenheimer

Microsoft’s quarterly results were “impressive,” Horan said. The company “manages to generate its own gravity, shrugging off macro concerns and handily topping 3Q23 revenue and EPS estimates by 4% and 10%, respectively, with constant currency (CC) revenue growth jumping to +10% from last quarter's +7%."

“Microsoft's purposeful AI moves have left competitors scrambling to respond,” he added.

Raymond James

“Microsoft reported F3Q23 results above expectations driven by outperformance in More Personal Computing and Office Commercial, while Azure growth was in-line with guidance,” Marok said.

“We still think that Microsoft is best-positioned in the industry to capitalize on trends in the market both currently and likely to develop, and stands to be a share gainer for the foreseeable future, though the path to get there may not be totally linear as macro disruptions spur near-term fluctuations,” he added.

Mizuho Securities

Microsoft managed to report healthy quarterly, despite “an increasingly tougher macro backdrop,” Moskowitz stated.

“Notwithstanding a clearly more difficult operating environment, we remain confident that MSFT's growth opportunities over the medium-term and beyond are greater than many realize, and this includes significant Generative AI monetization,” he added.

MSFT Price Action: Shares of Microsoft had risen by 6.97% to $294.63 at the time of publishing Wednesday.