What Analysts Think of Microsoft Stock Ahead of Earnings

Key Takeaways

Microsoft ( MSFT ) is set to report fiscal second-quarter earnings after the market closes Wednesday, with analysts largely bullish ahead of the results.

“Investor sentiment has shifted negative as a ‘wall of worry' around gross margins, capex , GenAI monetization and the OpenAI relationship builds,” Morgan Stanley analysts said recently, noting that Microsoft has underperformed other large cap software companies over the past three months.

The firm lowered its price target to $540 from $548 but said Microsoft’s position in generative artificial intelligence and the recent market trends create “an attractive entry point.”

Overall, 18 of 19 analysts tracked by Visible Alpha have a “buy” or equivalent rating, compared to 1 “hold” rating. The consensus price target is just over $517, a 16% premium to the stock's Friday close around $444.

Wall Street expects Microsoft to report revenue of $68.92 billion, up 11% year-over-year; and earnings of $23.36 billion, or $3.13 per share, up from $21.87 billion, or $2.93 per share a year earlier. Revenue from Microsoft's Intelligent Cloud segment, which includes its Azure cloud computing platform, is expected to climb 20% to $25.76 billion.

Jefferies analysts are "confident in Azure's reacceleration" in the second half of the fiscal year, the firm said recently. The analysts pointed to a recent Microsoft blog post announcing a "new, large Azure commitment" from ChatGPT maker OpenAI. Jefferies holds a "buy" rating and a price target of $550.

Shares of Microsoft are up about 11% over the past 12 months.

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