Street View: Microsoft reaps AI rewards without the usual price tag
MSFT•Microsoft's AI spending outlook eases investor concerns
Microsoft MSFT.O on Wednesday said it expects to continue generating cash in fiscal 2027, and forecast capital expenditure below analysts' estimates after an accounting change for data-center leases.
The stock jumped 9% before the bell, positioning the company to gain roughly $234 billion in market capitalization and reclaim a valuation exceeding $3 trillion.
Analysts see stronger AI monetization and capital discipline
Bernstein ("outperform," PT: $647) says MSFT is proving it is an AI winner with strong downside protection and further improvement ahead.
"Given the quality of the stock and low valuation we believe this is a stock investors should own" - Bernstein.
Exane BNP Paribas (PT: $549) says, "we believe the combination of accelerating AI monetization and greater discipline around capital deployment is precisely the framework investors had been hoping for".
Daniela Hathorn, senior market analyst at Capital.com, says MSFT provided fresh evidence that AI investment is beginning to translate into commercial returns, helping offset concerns around another increase in capital expenditure.
"MSFT has been very efficient at bringing on supply at the right time and it has remarkable visibility of earnings going forward," says Ben Barringer, head of technology research at Quilter Cheviot.
