Oppenheimer Reiterates Outperform on Microsoft, $515 Price Target

Oppenheimer analyst Brian Schwartz reiterated an Outperform rating and $515.00 price target on Microsoft (NASDAQ: MSFT).

“We maintain our positive stance on MSFT but believe F3Q results are not enough to change the narrative.

The bulls will highlight F3Q and F4Q showing accelerating revenue growth in the Azure business despite tougher comparisons, the M365 business accelerating against an AI disruption narrative, and its AI business growing triple-digits at a large scale as proof points Microsoft is an AI winner.

The bears will highlight declining margins across PBC, Intelligent Cloud, and gross margin from Microsoft having to play catch-up in AI by embedding lower-margin AI throughout products.

Also, Capex guidance is exceeding net income. Management likely guided Capex growth aggressively to correct the Street estimates which were too low.

Nevertheless, the latter feeds the bear case about poor Capex returns for Microsoft.”

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