Wall Street’s bullish sentiment on Microsoft hasn’t faded, even after the tech giant forecast disappointing revenue growth numbers. On Wednesday, Microsoft posted fiscal first-quarter earnings of $3.30 per share on revenue of $65.59 billion, exceeding analysts’ expectations of $3.10 in earnings per share on revenue of $64.51, per LSEG. The company’s revenue increased 16% year over year in the quarter, and its net income rose 11% during the period compared to the year-ago quarter. But Microsoft also called for revenue to be in the range of $68.1 billion to $69.1 billion for the current quarter, falling short of the $69.83 billion expected by analysts surveyed by LSEG. That forecast led shares to slip nearly 4% in premarket trading, despite the company’s strong earnings performance. The stock’s up 15% this year. Analysts from several major firms — including JPMorgan, Bank of America and Morgan Stanley — kept their overweight or buy-equivalent ratings on the stock after the earnings release. Here’s where some of them stand: Bank of America: Reiterated buy and $510 price target, implies 17.9% upside Barclays: Reiterated overweight and $475 price target, implies 9.8% upside Bernstein: Reiterated outperform and raised price target from $500 to $511, implies 18.1% upside Citi: Reiterated buy and $497 price target, implies 14.9% upside Evercore ISI: Reiterated outperform and $500 price target, implies 15.6% upside JPMorgan: Reiterated overweight and lowered price target from $470 to $465, implies 7.5% upside Morgan Stanley: Reiterated overweight and raised price target from $506 to $548, implies 26.7% upside Wells Fargo: Reiterated overweight and $515 price target, implies 19.1% upside Analysts who walked away from the quarterly print enthusiastic about Microsoft’s future returns noted the company’s already strong demand trends and eventual dominance in artificial intelligence-related technologies. “Demand signals remain strong … but supply constraints continue to limit growth in the GenAI-related businesses,” Morgan Stanley analyst Keith Weiss said in a Thursday note. “That said, with management confident in a 2H capacity ramp and MSFT trading at 25X CY26 GAAP P/E, investors should see rewards for waiting.” Microsoft is “by far the best positioned” software company to build a large and durable generative AI-enabled enterprise software business, and best-positioned to gain IT wallet share with those solutions, Weiss added. Weiss, like many analysts, noted that Microsoft management expects the company’s generative AI revenue to surpass a $10 billion run-rate in the second quarter of next year, which should drive an acceleration in overall Azure revenue and stabilize Microsoft’s M365 Commercial Cloud business. That would be the company’s fastest ever AI-related revenue growth rate. Evercore ISI analyst Kirk Materne cited the AI run-rate expectations heading into next year as a reason to be confident about the megacap tech’s ability to deliver strong top- and bottom-line growth. “We see weakness in the shares being a buying opportunity … we believe the long-term trends in the Commercial business remain intact as MSFT continues to take share in Cloud and its AI services continue to scale,” Materne said in a note to clients. Citi similarly said it is “buyers of the pullback” and expects a more positive set-up into the following quarter’s results as Microsoft ramps up its AI revenue. MSFT YTD mountain Microsoft performance this year. Barclays, which has one of the lowest price objectives on Wall Street, said it sees Microsoft shares being “range bound” in the short term. Analyst Raimo Lenschow noted that second-quarter Azure growth guidance of between 31% and 32% was at the lower end of expectations, but said headwinds are likely temporary. “Investors needs to have faith that the ongoing high Capex investments (~$20bn including leases in Q1) will turn into meaningful revenue in the future,” he said in a note to clients. “We are convinced, but can understand how the market may want to see more tangible results.”
