Bernstein Raises Microsoft Price Target to $646

Bernstein SocGen Group analyst Mark Moerdler raised the price target on Microsoft (NASDAQ: MSFT) to $646.00 (from $641.00) while maintaining an Outperform rating.

“A good quarter, but the debate continues; While this was a solid quarter beating consensus on every major metric, this was not the definitive Azure acceleration qtr we had hoped for.

At a high level Azure was in-line; CAPEX was slightly lower; while Copilot significantly beat. Q4 guide was similar with CAPEX in-line, Azure slightly above; and Copilot growing strong.

It was a solid quarter but not enough to make those sitting on the sidelines to return to Microsoft.

But one must look a bit deeper to see that the global Gen AI disruption cycle is good for Microsoft: 1) AI is a driver of growth for Microsoft and not a headwind; 2) Copilot strength shows AI is not eating Microsoft’s apps/ SaaS business; 3) Operating margins are increasing when AI worries point to deceleration; and 4) The Azure growth acceleration is not off the table, it layers in over time.”

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