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M Stanley: Microsoft (MSFT.US) Share Price Yet to Reflect Demand Durability and Long-term AI Monetization Opportunities, Maintains Overweight
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Microsoft (MSFT.US) will announce its third fiscal quarter results for the period ended March after market close on April 29. A report by M Stanley noted that Microsoft (MSFT.US) delivered strong results for its second fiscal quarter ended December last year, exceeding market consensus across all three business segments. Total revenue was about 1% above expectations, driven by Azure growth of 38% at constant currency (above guidance of 37% at constant currency). This revenue growth was coupled with solid gross margin performance and approximately 160 bps YoY expansion in operating margin. The broker stated that Microsofts forward indicators remain robust, with remaining performance obligations rising 110% YoY to approximately USD625 billion, while current remaining performance obligations increased 39% YoY, further confirming sustainable commercial demand. For the third quarter ended March, Azure revenue is forecast to grow about 39% at constant currency. For the fourth fiscal quarter ending June, Azure growth guidance at constant currency is around 30% to 37% (low to mid-30%), which could help overcome investor concerns stemming from capacity and allocation constraints. The broker also expects quarterly operating expenses to rise by high single-digit to low double-digit percentages, and by mid- to high single-digit percentages for the full fiscal year, which should help offset gross margin pressure and support double-digit operating profit growth for the full fiscal year. The broker added that Microsofts current share price is trading at about 20x forecast EPS for the next fiscal year. It believes the valuation has yet to fully reflect demand durability and long-term AI monetization opportunities, indicating an attractive risk-reward profile. The broker maintains an Overweight rating on Microsoft with a TP of USD650. (fc/da) This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. Auto-translated by AI AASTOCKS Financial News |
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