TD Cowen analyst Derrick Wood has reaffirmed a Buy rating on Microsoft, trimming his 12-month price target to $625 from $655 to reflect potential capacity constraints in the company’s AI infrastructure business. Wood’s channel checks indicate stable to strengthening demand for GPU and CPU capacity in Azure, but he warns that supply shortages could limit growth acceleration over the next two quarters. He still sees room for roughly two percentage points of upside to Azure’s constant-currency growth versus consensus forecasts, offset by bottlenecks in data center build-out. The firm’s revised target implies 40% upside from recent share levels, while TipRanks data show 32 of 34 Wall Street analysts rate Microsoft a Buy, with an average 12-month target of $630.

Microsoft has joined forces with Bristol Myers Squibb to integrate FDA-cleared radiology AI algorithms into the Precision Imaging Network, a platform used by over 80% of U.S. hospitals. The joint solution will automatically analyze chest X-rays and CT scans to flag hard-to-detect lung nodules and track patients through to follow-up care, addressing a problem where more than half of incidental findings are lost to monitoring. Lung cancer claims approximately 125,000 lives and diagnoses 227,000 new cases annually in the U.S., with rural and under-resourced communities facing the highest mortality rates. Alexandra Goncalves, VP of Digital Health at Bristol Myers, said the workflow will guide non-small cell lung cancer patients to precision therapies more quickly, leveraging Microsoft’s scalable cloud infrastructure and BMS’s oncology expertise.

In its fiscal Q1, Microsoft reported revenue of $77.67 billion, up 18% year-over-year, with Azure revenue climbing 40% on a constant-currency basis. The company posted diluted EPS of $4.13, while capital expenditures reached $34.9 billion as management doubles down on data center capacity to meet surging AI workloads. Microsoft entered the quarter with a backlog of $392 billion in contracted cloud commitments and guided to similar Azure growth rates in the next quarter. Despite a 16% share price decline since November, investors point to the 28× forward P/E multiple—near its five-year trough—and expectations of 19% EPS growth in 2026 as indicators that the pullback represents a buying opportunity, with upside potential toward consensus targets around $600 per share.