Street View: Microsoft reaps AI rewards without the usual price tag
MSFT•Shares jump after results and guidance
Shares rise 9.6% to $428.03 premarket, positioning the company to gain around $280 billion in market capitalization and reclaim a valuation exceeding $3 trillion.
On MSFT, at least eight brokerages raise PT, while two cut it after Q2 results, according to data compiled by LSEG.
Brokers and analysts say AI monetization is showing through
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.
Microsoft forecasts continued cash generation and lower capex
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.
