Benzinga - by Shanthi Rexaline, Benzinga Editor.
Software giant Microsoft Corp. (NASDAQ:MSFT) reported better-than-expected fiscal year 2024 second-quarter results on Tuesday, prompting Wedbush analyst Daniel Ives to reaffirm his optimistic outlook on the company.
Analyst’s Take: Ives maintained an Outperform rating and set a $450 price target for Microsoft stock.
Microsoft’s fourth-quarter earnings and revenue were driven by substantial investments in integrating artificial intelligence (AI) into its overall portfolio to spur growth, according to Ives. “This was another masterpiece quarter and guidance from [Satya] Nadella that should be hung in the Louvre,” he said.
Ives anticipates the results will have a significant ripple effect across the tech industry on Friday.
Ives highlighted that Microsoft is in the early stages of a “major monetization” opportunity, as more than 60% of its installed base aims to implement AI functionality across the entire enterprise and commercial landscape in the coming years.
Why It Matters: With Microsoft intensifying its AI strategy, Ives mentioned the notable demand generated by Copilot, stating that its monetization is progressing, and further acceleration is expected in fiscal year 2024.
In terms of specific business segments, Azure’s public computing service revenue experienced a 30% increase, surpassing the 27% consensus estimate, with AI transformation contributing to an acceleration in deal flow, according to Ives.
“The company continues to infuse AI across every layer of the tech stack to generate strong profitable growth over the near-term with Copilot an additional high octane growth driver to the MSFT story,” he said.
Ives concluded by characterizing the third-quarter guidance as “solid.”
Microsoft Price Action: Microsoft ended Tuesday’s session down 0.28% at $408.59 and lost an incremental 0.33% in after-hours trading, according to Benzinga Pro data.
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| Feb 2022 | Tigress Financial | Maintains | Buy | |
| Jan 2022 | Citigroup | Maintains | Buy | |
| Jan 2022 | Morgan Stanley | Maintains | Overweight |
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