A pullback in Microsoft Corp (NASDAQ:MSFT)'s shares after its fiscal second quarter revenue guidance missed estimates is a buying opportunity, analysts believe.
Shares of Microsoft traded down 5.2% at about $410 post earnings.
“We are buyers of the pullback in shares and expect a more positive set-up into Q2 results as Microsoft crosses $10 billion in AI revenue ahead of a 2H reacceleration in Azure,” Citi analysts wrote in a note to clients.
They wrote that while Q2 negative estimate revisions weigh on the stock, the strong commercial bookings and more detailed commentary on 2H suggest potential upside to their 2H Azure estimates at 35% plus compared to their 34% estimate.
Analysts at Wedbush also wrote that they would be “strong buyers” of Microsoft on any weakness on Thursday.
They disagree with bulls who were expecting more than the 31% to 32% Azure growth guidance for the December quarter.
“We actually disagree with this initial take as the new Azure reporting standards have moved Street numbers all around and a slight deceleration is totally expected by many investors with some supply constraints and reacceleration in 2H25,” they wrote.
Wedbush added that they came away from Q1 more bullish on Microsoft after seeing AI growth and Copilot monetization play out.
“The bears will try to split hairs on any number but ultimately this is a tech stalwart in major growth mode....and we see no signs of slowing down based on our checks and these impressive results/outlook that give us any pause in our bullish thesis,” analysts wrote.
Additionally, Jefferies analysts remain confident about Microsoft as an AI winner.
“Positively, (fiscal second half of 2025) Azure acceleration was reiterated as capacity comes online and Copilot adoption continues to track well,” they noted.
Citi sees Microsoft as a ‘Buy’ with a $497 price target, Wedbush rated it ‘Outperform’ with a $550 price target, and Jefferies a ‘Buy’ also with a $550 price target.