Microsoft presents buying opp as shares slide despite massive growth: analysts

Microsoft (NASDAQ:MSFT) shares will likely remain range bound in the short term despite the company delivering significant revenue growth across multiple sectors for the foreseeable future.

“In the short term, we fear the wait will continue for MSFT’s shares,” said Barlcays analysts, led by Raimo Lenschow, in a Thursday note. “Short-term supply issues around AI capacity are likely to cause stable Azure consumption trends in Q2 vs. Q1, which is solid but not necessary a new catalyst that gets investors excited. Things should get better in 2H, but investors will only find out about the magnitude of this re-acceleration in April 2025 when MSFT FY3Q numbers come out, leaving little to be excited about in the near term.”

The third-highest valued company in the world, delivering 16% year-over-revenue growth for the first quarter of fiscal 2025, isn’t good enough to bump up shares as the stock already trades at 32x FY25 EPS targets, according to Stone Fox Capital, Investing Group Leader for Out Fox The Street.

Still, Barclays maintains its Overweight rating and $475 price target on the stock.

J.P. Morgan reiterated its Overweight rating following earnings, but ever-so-slightly lowered its price target to $465 from $470.

“Microsoft is reaffirming its expectation of a 2H Azure acceleration on the back of incremental capacity coming online,” said J.P. Morgan analysts, led by Mark Murphy, in an investor note. “One area of misalignment is that we believed that Q2 Total Revenue street consensus was set fairly logically, and yet Microsoft is proving us wrong by guiding below, with the vast majority of the guide-below in consumer areas of gaming and devices that are less critical to the fundamental thesis and completely outside the scope of our survey work, yet still take some air out of the near-term optics.”

Meanwhile, Jefferies maintained its Buy rating and a hefty price target of $550.

“MSFT expects F2Q total revenue of $68.1B to $69.1B (9.8-11.4% yoy cc) coming below cons at $69.9B by 1.8% at the midpoint,” said Jefferies analysts, led by Brent Thill. “This is the 9th time in the last 10 Q’s when MSFT has guided below expectations for total revenue.”

Evercore ISI eyes the pullback following earnings as a buying opportunity. It maintains its Outperform rating and $500 price target.

“We believe the long-term trends in the Commercial business remain intact as MSFT continues to take share in Cloud and its AI services continue to scale,” said Evercore analysts, led by Kirk Materne. “As such, we believe the company remains well-positioned to deliver durable top-and-bottom line growth.”

Wedbush also reiterated its Outperform rating and $550 price target. The financial services firm disagrees with the market take that 31% to 32% Azure growth for the quarter in progress is an issue.

“We actually disagree with this initial take as the new Azure reporting standards have moved Street numbers all around and a slight decel is totally expected by many investors with some supply constraints and reacceleration in 2H25, and we would be strong buyers of MSFT on any weakness this morning,” Wedbush analysts, led by Daniel Ives, said in a note.