Microsoft rises even as Oppenheimer lowers Azure estimates, raises capex forecast
Microsoft shares rose 0.8% in premarket trading despite Oppenheimer lowering its Azure revenue estimates due to reduced AI revenue expectations. Analyst Timothy Horan adjusted Azure estimates down by 100-200 basis points for 2025 but maintained an Outperform rating and price target. He raised the capex forecast, noting it remains below Wall Street consensus. Horan indicated that while the stock is trading at average multiples, it may dip in the short term, but long-term investors should find value in Microsoft's enterprise AI platform.
- Microsoft (NASDAQ:MSFT) shares rose 0.8% in premarket trading on Thursday, even as Oppenheimer lowered its estimate for Azure revenue and increased its capex spending forecast due to rising artificial intelligence costs.
- "We cut our Azure revenue estimates -100bps to -200bps on a normalized basis for 2025 going forward mostly due to approximately $5B less AI revenue than we were assuming at the beginning of the year," analyst Timothy Horan wrote in an investor note. "The Azure metric more closely aligns to cloud consumption and should help Azure growth stay above 30% for 2025."
- Horan, who maintained his Outperform rating and $500 price target on Microsoft, raised his capex spending forecast, but noted he is still around $2B below the Wall Street consensus.
- "The stock is trading in line with its average multiples over the last five years, but could fall below in the short term," Horan added. "For long term investors we continue to believe they have the best enterprise AI platform and retain our 18-month $500 price target."