Guggenheim Reiterates Buy on Microsoft, $586 PT

Guggenheim analyst John DiFucci reiterated a Buy rating and $586 price target on Microsoft (NASDAQ: MSFT).

“Microsoft reported a strong F4Q26, accelerating Azure revenue to 43% y/y growth (vs. 39-40% guidance) from 39% in F3Q26, but more impressively, guided to further acceleration of 45% growth in F1Q27.

These are the numbers that drove the stock up 9% after hours reflecting the billions of green dollar bills added to the value of Microsoft.

While Azure is the primary driver of this stock, M365 Commercial growth of 14% y/y was at the high end of guidance of 13-14%, and Windows OEM and Devices declined 7% versus guidance for a decline of mid to high teens.

Guidance for 15% cc M365 Commercial implies acceleration in F1Q27 and throughout the year on the back of Copilot traction that’s expected to accelerate (not to mention price increases that took effect on July 1).

Windows OEM revenue is expected to decline precipitously (- low 20s %) on the back of challenging PC shipment expectations (to the developed regions of the world).

The primary reason Windows OEM is important is because it contributes an outsized portion of profit (we believe about 20%), though any concerns should be suppressed with guidance of double-digit operating income for the year.

In summary, the quarter was strong across all businesses, especially the most important (Azure), and so was guidance, other than MPC due to anticipated weak Windows driven by PC shipments, though double-digit operating income for the year should alleviate concerns on this.

We remain Buy with a $586 Price Target.”

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