Key Takeaways
- Citi reaffirmed its “Buy” stance on MSFT, highlighting artificial intelligence progress and robust cloud performance
- Q2 results showed revenue of $81.3B, representing 17% annual growth; profits soared 60% to $38.5B
- Azure platform expanded 39% annually; Microsoft 365 Copilot user base surged 160% to reach 15 million paying customers
- Goldman Sachs maintained Buy rating with $600 target following encouraging Maia 200 chip developments
- Strong Buy recommendations from 41 of 50 Wall Street analysts, with consensus target of $595.60
Microsoft (MSFT) has captured fresh momentum on Wall Street as two major investment banksāCiti and Goldman Sachsāhave recently doubled down on their bullish outlooks for the tech giant.
Shares of MSFT are currently hovering near $397, representing approximately a 30% pullback from record levels, while maintaining a massive $2.9 trillion valuation.
Citi’s Tyler Radke maintained his positive outlook following discussions with Microsoft’s investor relations leadership. His analysis centered on three critical factors: the company’s competitive standing in artificial intelligence, cloud infrastructure capacity planning, and strategic capital allocation.
During the most recent December quarter, Microsoft delivered $81.3 billion in total revenue, marking a 17% year-over-year increase. Bottom-line results were particularly impressive, with net income reaching $38.5 billionārepresenting a substantial 60% jump from the previous year.
The cloud division delivered exceptional performance. Microsoft’s cloud operations generated over $50 billion in quarterly revenue for the first time ever, posting 26% year-over-year growth.
Azure, the primary driver of this success, registered 39% expansion during the period. Current market demand is exceeding available capacity, though Microsoft has outlined strategies to address this imbalance.
A key component of this strategy involves proprietary silicon. The company’s Maia 200 AI inference accelerator provides over 30% better cost efficiency versus its predecessor, as highlighted by CEO Satya Nadella.
Goldman Impressed by Maia 200 Progress
Goldman Sachs analyst Gabriela Borges maintained her Buy recommendation with a $600 price objective following Microsoft’s January announcement of the Maia 200 chip.
Prior to this release, Maia lacked comprehensive benchmark results and was widely perceived as lagging behind competing solutions. Goldman now indicates that performance metrics are increasingly competitive with Amazon’s Trainium and Google’s TPU offerings in terms of raw processing power.
Goldman identified this development as beneficial for Microsoft’s cost-performance ratio in AI computing and its potential to eventually achieve CPU-based Azure margin levels on artificial intelligence workloads. Currently, Microsoft operates with a 69% gross profit margin and delivers 34% return on equity.
The investment bank acknowledged certain constraintsāparticularly the lack of comprehensive production performance metrics and the necessity of developing a more robust software ecosystem supporting Maia.
Rapid Expansion in Copilot and GitHub
Microsoft 365 Copilot experienced unprecedented user growth, climbing more than 160% year-over-year. The platform now serves 15 million paying users, with Radke noting it has evolved into a legitimate revenue catalyst for Microsoft’s enterprise software segment.
GitHub Copilot has accumulated 4.7 million paid subscribers, reflecting 75% annual growth.
Dragon Copilot, deployed across healthcare facilities, is processing 21 million patient encounters quarterly.
More than 80% of Fortune 500 enterprises have deployed AI agents leveraging Microsoft’s platform.
Among 50 analysts tracking MSFT, 41 assign a “Strong Buy” rating, four recommend “Moderate Buy,” and five maintain “Hold” positions. The average price target stands at $595.60.
Wall Street forecasts Microsoft’s revenue climbing from $281.72 billion in fiscal 2025 to $591 billion by fiscal 2030, while earnings per share are expected to increase from $13.64 to $31.84 during this timeframe.
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