Morgan Stanley Reiterates Overweight on Microsoft, $600 PT

Morgan Stanley analyst Adam Wood reiterated an Overweight rating and $600 price target on Microsoft (NASDAQ: MSFT).

“Microsoft’s 4Q26 results delivered broad-based upside, with $90.0B revenue (+18% YoY) and operating income of $40.60B beating consensus by 4.2%.

Azure growth accelerated four points sequentially to 43% (cc), beating the 39– 40% guide, with management citing CPU/GPU efficiency and faster build times.

Azure’s outlook strengthened, with guidance for ~45% constant-currency growth in 1Q27 and a reiteration that F1H27 growth should accelerate vs F2H26.

M365 Copilot reached over 30MM paid seats, up from over 20MM last quarter, as ~10MM net adds beat expectations closer to ~6MM by a wide margin.

Margins held up despite AI build: gross margin 67.2%, operating margin 45.1%; FY27 calls for double-digit EBIT growth and margins down less than one point.”

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