Bank of America: Raises Microsoft target price to $515, strong third-quarter earnings report and outlook

Zhitong
2025.05.04 12:25

Bank of America Securities published a research report stating that Microsoft's third-quarter financial report and outlook are strong, primarily due to its cloud computing service Azure. Azure performed exceptionally well during the quarter, growing 35% at constant exchange rates, far exceeding the expected median of 31.5%. Although the quarter benefited from the delivery of graphics processing units and central processing units, the robust execution of core cloud migration deals also made a significant contribution. OpenAI drove a 16 percentage point increase in Azure, which should alleviate concerns about a slightly strained partnership. Bank of America Securities indicated that with accelerated growth, capital expenditures peaking, and AI-driven efficiency scaling, it predicts Microsoft's free cash flow growth will accelerate to nearly 20% by fiscal year 2027. The firm raised Microsoft's target price from $480 to $515 and reiterated its "Buy" rating

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