In early April, we noted:
Microsoft has been one of the hardest-hit names in tech, down roughly 22% year-to-date. The stock now trades at about 22x forward P/E — a level not seen since 2016. For the first time since 2015, Microsoft is trading at a discount to the broader S&P 500. Technically, the stock now sits at strong support dating back to April. If it can hold that, despite the war-fueled market pullback, we’d like to see the tech giant rally back to $460 initially.
At the time, MSFT traded at $372.29.
Today, it’s up to $432.10 and could rally even higher. In fact, we’d like to see the tech giant refill its bearish gap at around $480 near-term.
Helping, Goldman Sachs now has a buy rating on the tech giant with a $600 price target. According to the firm, Microsoft’s growth story remains intact, and the risk is already priced in. The firm also says Microsoft is the best compounder across AI products because it earns across AI compute, platforms, and applications.
In addition, Citi analysts say they see “solid checks” heading into MSFT earnings on April 29.
“We are incrementally more positive into MSFT’s F3Q, with upbeat takeaways from our reseller survey, AI Summit, Fabric conference, and intra-Q NDR,” analyst Tyler Radke said, as quoted by Seeking Alpha.
“Investor expectations and sentiment are relatively low, and there are near-term constraints on Azure/O365 growth, we believe fundamentals are improving and should yield a desirable accelerating growth story throughout FY27, where Citi’s Azure estimate is 3 points ahead of consensus. Our reseller checks improved QoQ against mixed partner checks. While our CIO survey was more positive for MSFT, amidst tightening budgets showing strong AI mindshare.”
Sincerely,
Ian Cooper
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