DA Davidson Lowers Microsoft Price Target to $550

DA Davidson analyst Gil Luria lowered the price target on Microsoft (NASDAQ: MSFT) to $550.00 (from $650.00) while maintaining a Buy rating.

“Microsoft reported total revenue of $82.9B growing 18.3% Y/Y, marking a ~160bp acceleration from the previous quarter.

Outside of Azure, during the quarter, the Productivity and Business Processes (PBP) segment saw an acceleration from the previous quarter to 17.0% Y/Y growth, with Microsoft 365 Commercial cloud revenue growing 19% Y/Y (15% in CC), Microsoft 365 Consumer cloud revenue growing 33% Y/Y (29% in CC) and Dynamics 365 growing 22% Y/Y (17% in CC).

Additionally, within the More Personal Computing (MPC) segment, which declined (1.0)% Y/Y, Windows OEM and Devices revenue declined (2.0)% Y/Y while Xbox hardware and Xbox content and services growth continued to decelerate from the previous quarter.

Management noted that AI revenue surpassed $37B in ARR (+123% Y/Y), reflecting the continued demand for the Azure platform.

Looking towards next quarter, management is guiding total revenue to a range of $86.7B to $87.8B, implying Y/Y growth of ~14% at the midpoint, with accelerating commercial growth partially offset by the consumer business.”

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