Microsoft (NASDAQ:MSFT) earnings are set to take center stage today after the close, as the tech giant reports results for its fiscal fourth quarter. With shares up 45% since April’s low, investors are hoping a strong performance will push the stock even higher.
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Analysts are leaning in the same direction. Raymond James’ Andrew Marok points to Microsoft’s strong positioning as a reason to expect the company to bring the goods.
“Sentiment is broadly positive heading into the print, with bullish views centered on Azure’s sustained demand and Microsoft’s continued success in unlocking AI capacity,” the analyst explained.
Marok anticipates Azure revenue will come in near the top of the June guide. While expectations are high, recent momentum appears intact with Marok’s checks showing steady trends this quarter. The main uncertainty stems from possible trade-related disruptions earlier on. Encouraging feedback highlighted stronger consumption growth in the quarter, though this was partly tempered by longer deal cycles at the start of the quarter as tariff concerns unsettled enterprises in April.
“We see this as largely transient (or at least adjusted-to by now),” the analyst went to add, expecting cloud demand to stay strong, supported by multi-year commitments and solid backlogs, along with ongoing momentum in cloud migration, modernization, and the expansion of AI operations – key priorities for enterprises and drivers of workload growth.
Industry checks indicate that Microsoft is adding AI capacity at a steady rate, reinforcing Marok’s view of continued AI-related workload growth in the quarter. Based on this, the analyst thinks Azure will achieve his forecast of 34% year-over-year (in constant currency) growth.
Elsewhere, Marok believes there could be upside to his forecast of an 8% YoY decline in Windows OEM and Devices, as PC checks this quarter were “largely positive.” The strength was fueled by vendors pulling forward inventory, increased enterprise demand ahead of expected U.S. tariffs, pricing adjustments anticipated in the second half of 2025, and the Windows 11 upgrade cycle – chiefly among devices more than five years old.
Marok expects investors will continue closely watching Microsoft’s spending plans, particularly as it pursues multiple growth initiatives led by GenAI, especially given Google’s recent $10 billion increase to its 2025 capex guidance of $85 billion, with further growth expected in 2026. Industry checks indicate that demand for Microsoft’s AI workloads is still running ahead of supply, though capacity constraints have eased since late last year.
“We are confident in our FY25E capex of $65.6B (consensus $65B) but see potential for FY26 upside as MSFT remains committed to its leadership position in the AI capacity arms race,” Marok summed up.
Conveying his confidence, the analyst reiterated an Outperform (i.e., Buy) rating on MSFT shares, and raised his price target from $490 to $570, implying the stock will gain 11% over the next 12 months. (To watch Marok’s track record, click here)
Sentiment is similar amongst most of Marok’s colleagues; based on a mix of 30 Buys and 3 Holds, the analyst consensus rates the stock a Strong Buy. Going by the $558.71 average target, a year from now, shares will be changing hands for a ~9% premium. (See MSFT stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.