Microsoft Still a Buy but Analyst ‘Pounding the Table With Little Less Vigor’

Radke wrote in a research note that while he still remains positive on the company’s pace of product innovation around generative artificial intelligence, many of the potential positive catalysts for the stock that excited him already have come and gone.

“With the stock’s notable outperformance over the last 2-3 months … we are pounding the table with a little less vigor and closing our positive catalyst watch,” Radke said.
Microsoft
shares have risen 14% from when the company posted fiscal first-quarter earnings on Oct. 24 to Thursday’s close of trading.

Fiscal first-quarter earnings at Microsoft were better than expected and the company also reported that its Azure cloud business grew significantly in the quarter.

Wall Street also been excited about new launches from Microsoft, including Copilot, an AI-based companion for the company’s suite of apps like PowerPoint and Excel.

“Copilot continues to be a focus going forward as hundreds of organizations wait in line for various use cases with AI technology,” Wedbush analyst Dan Ives wrote in a note Wednesday in which he raised his price target on the shares to $425 from $400 and maintained his Outperform rating.

Microsoft also recently unveiled its Azure Maia AI Accelerator, a new AI chip.

Radke said Microsoft remains Citi’s preferred megacap name as the firm continues to see “a durable multi-year product cycle driving sustained double-digit top-line/bottom line growth.”

Shares of Microsoft were down 1.4% Friday to $371.03. The stock has jumped 55% this year. The
Dow Jones Industrial Average,

S&P 500,
and
Nasdaq
each were down about 0.1%.

Write to Angela Palumbo at [email protected]