The recent decline in major technology stocks did not spare Microsoft (NASDAQ: MSFT) shares, which decreased by 4.23% over the last five trading sessions. Nonetheless, the stock has since recovered some of the losses, with pre-market gains standing at 0.58% at the current moment.
Despite the recent shift from large-cap to small-cap stocks, MSFT stock is still favored by analysts due to its robust fundamentals, significant market share, and growth potential.
Assessment of MSFT Stock by Wall Street
The support for this tech behemoth from Wall Street analysts is evident through the latest price targets set by prominent institutions before its Q2 earnings announcement on July 30.
In the most recent price target update on July 18, TD Cowen expressed optimism about Microsoft stocks, increasing the price target from $470 to $495 while reiterating a “buy” recommendation. The firm’s analysis emphasizes the consistent performance of Microsoft’s Office 365 Commercial division, projecting a 14% growth in constant currency (cc).
Despite a 15% cc growth in the previous quarter, TD Cowen anticipates Microsoft to deliver a solid quarter, with vendor consolidation and increased Average Revenue Per User (ARPU) through upgrades serving as favorable factors.
The day before, on July 17, Bank of America raised its price target for MSFT to $510 from $480, citing strong performance in Azure cloud services and positive reception of the Copilot feature.
Analysts highlighted the strong performance of Microsoft partners, with many surpassing or meeting expectations in preparation for Q2 FY24 results on July 30. They predict a year-over-year Azure growth of 31.5%, with an 8% contribution from AI workloads, exceeding the initial expectation of 30.5%.
Optimistic View on MSFT Stock Persists
On the same day, Citi reaffirmed its positive stance on the software giant by maintaining a “buy” rating and a $520 price target. Expectations are high for Microsoft’s upcoming second-quarter results, with strong projections for both revenue and earnings.
Despite an 11% increase in shares since the last earnings report, Citi believes the forthcoming results will demonstrate the company’s sustained growth trajectory, even if they do not act as a significant catalyst.
July 16 witnessed Mizuho Securities updating its outlook on Microsoft stock, elevating the price target to $480 from $450 and retaining an “outperform” rating. This adjustment follows Microsoft’s fiscal third-quarter earnings report, which revealed total revenue of $61.9 billion, surpassing analysts’ forecast of $60.8 billion.
With a consensus rating of “strong buy” from 35 analysts and an average price target of $504.12, suggesting a 13.66% potential upside, MSFT shares continue to be favored holdings among Wall Street analysts.
Image Source: Below the Sky / Shutterstock