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17/05/24
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Analysts Increase Price Targets for Microsoft
On Friday, analysts at RBC Capital Markets increased their Microsoft stock target price to $500 from $450 and cited positive feedback from a recent investor meeting with the Directors of Investor Relations of Microsoft.
The firm said AI was a key growth driver for Microsoft and noted its aggressive investment in this field.
Analysts said in the note although CapEx would likely continue to increase and impact margins, Microsoft was focused on bringing the cost curve down while also following demand signals.
They added that advances such as Maia (custom AI silicon), and the more efficient GPT-4.0 will help drive the cost curve down.
Another key advantage was the firm’s experience with cloud services as it provided a shared architecture for all AI workloads.
RBC also pointed out that there was a clear trend of companies migrating more workloads to the cloud although Microsoft’s core cloud business was still in its early stages.
The growth of Azure, excluding AI, has accelerated in the Q2. Analysts noted that core Azure was benefiting from the wider AI roadmap, as 33% of the more than 50K Azure AI customers were net new to Azure.
The firm also mentioned Microsoft Copilot, which was sending verticalized use cases and positive demand signals although it is in its early stages.
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