Guggenheim Raises Microsoft Price Target to $595

Guggenheim analyst John DiFucci raised the price target on Microsoft (NASDAQ: MSFT) to $595 (from $586) while maintaining a Buy rating.

“Microsoft reported a strong F1Q27. Azure revenue growth accelerated to 48% y/y cc (vs.

44-45% guidance) from 42% in F4Q26, and more impressively, MSFT guided to further acceleration of 49-50% in F2Q27, well above consensus of 45.5%.

Despite third-party capacity delays in the quarter, management credited Azure’s performance to efficiency gains across its GPU and CPU fleet, which freed up capacity for customers, with demand still exceeding supply.

While Azure tends to be the primary driver of the stock, M365 Commercial Cloud also reported strong results, growing 18% cc, 100bps above guidance-informed consensus.

ARPU was the primary growth driver, led by M365 Copilot, E5 and E7 adoption, along with usage-based offerings (e.g., GitHub Copilot).

F2Q guidance was also above Street estimates, and management expects growth to accelerate through the year.

Windows OEM and Devices declined 22% y/y and is guided to decline in the mid-30s % in F2Q, well below Street estimates.

That reflects elevated inventory, weak PC demand and the Windows 10 end-of-support comp.

Windows OEM matters because it contributes an outsized share of profit (we believe about 20%, versus less than 10% of revenue).

Capex came in below consensus, and the company noted that some third-party capacity deliveries have shifted to F2H27.

That said, management expects to remain FCF positive in FY27, which we believe partly underscores the strength of its two near-monopoly businesses, M365 and Windows.

In summary, the quarter was strong, especially in Azure, with M365 Commercial Cloud also outperforming, partially offset by Windows. We remain Buy rated and raise our price target to $595, from $586.”

This research note is reproduced verbatim from the issuing firm. Price Target never edits, paraphrases or alters analysts’ words — we only republish them in one place.