Microsoft Corp. (NASDAQ:MSFT) shares received a nice price target bump a week ahead of the software giant’s quarterly earnings release.
The Microsoft Analyst: Piper Sandler analyst Brent Bracelin reiterated an Overweight rating on Microsoft shares and upped the price target from $465 to $485. The updated price target suggests the stock has about 10% upside potential.
“Growth investors should look beyond near-term fears of an AI overbuild with the lens of a broader cloud transformation still underway that could help sustain double-digit top-line and bottom-line growth through 2030,” the analyst said. He expects the Cloud mix, aided by AI, to expand to 63% by fiscal year 2026, up from 53% today and sharply higher than the 10% in fiscal 2016.
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The analyst noted that a majority of Microsoft AI shows up in IaaS rather than SaaS, with the proportion at 95% vs. 5%. He expects capex and lease to surpass $19 billion in the June quarter.
As such, the analyst increased his calendar year 2025 earnings per share estimate by 17 cents on slightly higher growth assumptions, and the calendar year 2025 P/E multiple from 33 times to 34 times on strong cloud momentum. The upward adjustment to the price target is to give effect to the revisions to the earnings estimate and the P/E multiple, he added.
Microsoft is scheduled to report its fiscal year 2024 fourth-quarter earnings after the market closes on Tuesday, July 30. Analysts, on average, expect the company to report earnings per share of $2.93 and revenue of $64.35 billion. This compares to the year-ago earnings of $2.69 per share and revenue of $56.19 billion.
Microsoft Price Action: Microsoft shares ended Monday’s session up 1.33% to $442.94, according to Benzinga Pro data. The stock has gained over 18% year-to-date.
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