Microsoft Corporation (NASDAQ:MSFT) highlighted AI and cloud growth during its first-quarter financial results. Here's what analysts are saying about the quarter and what comes next.
- MSFT shares are experiencing downward pressure. Review the technical setup here.
The Microsoft Analysts:
- Wedbush analyst Dan Ives maintained an Outperform rating on Microsoft with a price target of $625.
- Goldman Sachs analyst Kash Rangan reiterated a Buy rating on Microsoft with a price target of $630.
Wedbush on MSFT: Strength in Microsoft's Azure was "front and center" for the company in the first quarter, Ives said in an investor note.
"AI Revolution hits next gear," Ives said.
Ives said Microsoft is continuing to capitalize on growth opportunities in the cloud segment.
The analyst highlights that Microsoft has more customers building AI apps and agents on its Azure infrastructure.
Ives highlights Microsoft's commercial remaining performance obligations up 51% year-over-year to $392 billion.
"MSFT fully committed to the AI buildout as the company looks to increase its AI capacity by 80% y/y with ~2x its data center footprint over the next two years."
Ives said the next stop for Microsoft could be joining Nvidia in the $5 trillion market capitalization club, with strong forward guidance for fiscal 2026.
"It remains clear that FY26 remains the true inflection year of AI growth for Microsoft."
Goldman Sachs on MSFT: The technology giant is "compounding growth at scale" and reporting solid margins, Rangan said in a new investor note.
With shares down after-hours on Wednesday, Rangan said the weakness in the stock could be related to fiscal 2026 guidance, higher CapEx, and higher equity ownership expenses in OpenAI.
"We think these issues are relatively near-term and tactical, and we remain constructive on the stock," Rangan said.
The analyst highlighted Microsoft Azure growth of 39% year-over-year, constant currency, in the quarter, which was one of the highest growth rates of Hyperscalers.
Rangan said Microsoft has done a great job of scaling operating margins even with higher CapEx spending recently.
For the company's OpenAI investment that will be adjusted based on non-GAAP earnings per share, Rangan said investors should still consider the value of owning around 27% of OpenAI moving forward.
"We believe Microsoft is one of the most compelling investment opportunities in the technology industry and across sectors."
The analyst said Microsoft will be able to capitalize on long-term trends like cloud consumption, digital transformation and generative AI.
"We see potential for sustained long-term growth."
MSFT Price Action: Microsoft stock is down 2.2% to $529.76 on Thursday versus a 52-week trading range of $344.79 to $555.45. Microsoft stock is up 26.6% year-to-date in 2025.
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