tl;dr
``` Following a recent survey of CIOs, Goldman Sachs reiterated its Buy rating on Microsoft (NASDAQ:MSFT) ahead of the tech giant's fiscal third-quarter results, slated to be released after the close of trading on April 25. "We continue to see Microsoft in a unique position to scale Gen-AI revenue w...
``` Following a recent survey of CIOs, Goldman Sachs reiterated its Buy rating on Microsoft (NASDAQ:MSFT) ahead of the tech giant's fiscal third-quarter results, slated to be released after the close of trading on April 25. "We continue to see Microsoft in a unique position to scale Gen-AI revenue without structural changes to its profitability profile," analyst Kash Rangan wrote in an investor note. "While Microsoft has called out a material sequential increase in CapEx to meet demand, we believe this cycle is pacing more efficiently than prior cycles." Rangan also reiterated his $450 price target on the stock. For the quarter, Rangan is expecting Microsoft's overall revenue to grow 15% year-over-year, while Azure is expected to grow 28% on a constant currency basis, aided in part by artificial intelligence. A consensus of analysts expect Microsoft to earn $2.84 per share on $60.85B in revenue for the quarter. There has been some concern amongst market participants that Microsoft's revenue from AI may not be up to expectations, but Rangan said the strength should be evident based on its "growing share of total cloud spending amongst peers." "The increased appetite to spend on new projects and Microsoft’s productivity-centric offerings position them well to gain share, even in a tighter IT backdrop," Rangan explained. Additional increases for Azure revenue can come from "outsized" generative AI workloads, the end of optimization efforts and tailwinds from faster redeployment of cost savings. "At a runrate, Azure will likely continue to be the primary driver of Gen-AI spend near-term, with more meaningful contribution from Copilots in Office and Security expected in CY25," Rangan said. "While we acknowledge the healthy retention and seat expansion seen within O365 Copilot, we expect Microsoft to discuss how more role-specific Copilots are likely to drive the adoption curve." ```
More about Microsoft Corporation
Company: Microsoft Corporation
Description: American multinational technology company producing computer software, consumer electronics, personal computers, and related services. Best known for Microsoft Windows, Microsoft Office suite, Internet Explorer, Edge web browsers, Xbox video game consoles, and Microsoft Surface lineup.
Ranking: No. 21 in the 2020 Fortune 500 rankings
Industry: Technology
Sector: Services-Prepackaged Software
Revenue: $296.56 billion
Current Price: $36.09
Change: $2.86
Change Percentage: 11.06%
Market Cap: $30.61 billion
EPS: $0.363
Shares Outstanding: 2.28 billion
Public Float: 227.58 billion
Beta: 462.44
PE Ratio: 0.332
Forward PE Ratio: 0.176
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