Microsoft Stock was trading nearly 6 percent lower, a level not witnessed for many trading sessions for the technology major. After quarterly results, Microsoft received positive ratings from many analysts with average target price in range of $480 - $500. The stock touched intraday low of $406.3 by the time of publication of this report.

Microsoft's fiscal first quarter results exceeded Wall Street’s expectations, with a 16% revenue increase driven by its expanding data center capacity and surging AI demand. Evercore ISI maintained its “Outperform” rating with a $500 target, citing strength in Microsoft’s Commercial Cloud and Azure's 34% growth. Despite positive growth, shares faced after-hours pressure due to guidance below market expectations for Azure’s next-quarter performance, with some AI capacities delayed to H2. DA Davidson revised its target downwards due to Azure’s slowdown, while Citi upheld a $497 target, projecting long-term upside.

Morningstar Research has suggested Fair Value Estimate at $490

Morningstar projects a fair value of $490, attributing growth to the revenue streams of Azure, Microsoft 365, Dynamics 365, and LinkedIn. These assets, coupled with burgeoning AI applications, are central to the forecasted 13% compound annual growth rate (CAGR) over the next five years.

Medium Uncertainty with a Favorable Risk-Reward Profile
The report assigns a medium uncertainty rating to Microsoft’s stock, balancing the risks of potential economic downturns against the strength of Azure, productivity suites, and gaming expansions. Azure remains a primary growth vehicle, forecasted to sustain mass adoption, especially in hybrid cloud environments.

Evercore ISI Upgrades on Strong Commercial Cloud Performance

Outperform Rating with $500 Target
Evercore ISI reiterated its "Outperform" rating for Microsoft, sustaining a price target of $500. This confidence reflects Microsoft’s Commercial Cloud segment, which achieved 16% growth in the first quarter, and Azure’s notable 34% growth on a constant currency basis.

Guidance Miss Triggers After-Hours Pressure
While robust, Microsoft’s results led to slight after-hours declines. Azure’s actual 34% growth marginally surpassed the 33% forecast, but forward guidance for Azure growth at 31-32% fell short of analysts' projections of 32-33%. According to Evercore ISI, this conservative guidance is a result of deferred AI capacity, which Microsoft aims to bring online later in the fiscal year.

Citi Sees Potential Upside Despite Mixed Quarterly Outcomes

Buy Rating Held with $497 Price Target
Citi remains bullish, maintaining its “Buy” rating and a $497 price target on Microsoft. Despite quarterly fluctuations, Citi projects Azure’s growth rate could outperform expectations in H2 as demand for Microsoft's AI technologies scales up, driven by higher anticipated adoption and broader infrastructure investments.

Barclays Holds Steady with Overweight Position

Reaffirmed Overweight with $475 Target
Barclays has reiterated its Overweight rating, with confidence in Microsoft’s broader AI and Commercial Cloud strategies. The firm’s $475 price target reflects long-term confidence in Microsoft’s market position despite short-term supply chain challenges that could impact AI deployment.

Microsoft’s Growth in AI and Data Centers Fuels Revenue

16% Revenue Increase Reflects Strong AI and Cloud Demand
Microsoft reported a fiscal Q1 revenue increase of 16%, reaching $65.6 billion, attributed to expanding data center capacity and accelerating AI demand. However, guidance for Q2 revealed challenges, including constraints from a collocation partner, which could temper Azure’s growth rate in the near term.

Disclaimer: Investors should consider conducting thorough due diligence or consulting with financial advisors before making investment decisions.