Microsoft Corp (NASDAQ:MSFT) has earned a price target boost from analysts at Wedbush following its earnings report, with analysts citing broad-based strength and powerful AI-driven momentum across the company's Cloud portfolio.
“We are raising our price target from $475 to $515 following this robust Microsoft quarter while maintaining our ‘Outperform’,” analysts wrote, calling the results “an Aaron Judge-like quarter featuring beats across the board.”
Shares of Microsoft added 8.7% at about $430 on Thursday afternoon.
The standout from Microsoft’s Q1 report was Azure, where revenue rose 33% year-over-year, topping both Street estimates of 31% and the internal “bogey” of 31%.
“AI making up just under half of this growth (16% year-over-year), which speaks to the eye-popping growth Microsoft is seeing in the space,” Wedbush noted.
Overall Cloud revenue came in at $42.4 billion, up 22% in constant currency, bolstered by strong commercial bookings and demand for Microsoft’s full Cloud portfolio.
“This was music to the ears of the bulls as Microsoft exceeded Street expectations with reaccelerated Azure growth within this period of uncertainty as the AI Revolution remains prominent with more companies doubling down on these strategic initiatives despite tariff uncertainty,” Wedbush said.
Doubling down on AI
Wedbush highlighted Microsoft’s continued investment in AI infrastructure, brushing aside recent speculation about data center project cancellations.
“The company is still doubling down on the AI monetization strategy within cloud with capex growing quarter-over-quarter while reaffirming its $80 billion fiscal year 2025 guidance and expecting capex to continue growing into fiscal year 2026,” analysts wrote.
Looking ahead, the firm sees AI as the core driver of Microsoft’s next growth cycle.
“Our bullish thesis remains that the cloud and underlying Office 365/Windows ecosystem is going to comprise a larger piece of Redmond’s revenue going forward and will ultimately spur growth and margins for fiscal year 2026,” they wrote.
Analysts estimate that “for every $100 of cloud Azure spend with Microsoft the last few years there is an incremental $40 of AI spend.”
Upbeat guidance
Microsoft’s guidance for the upcoming fiscal fourth quarter also surpassed expectations.
Intelligent Cloud is forecast to reach $28.75 billion to $29.05 billion, compared to the Street’s $28.55 billion.
Azure alone is expected to grow at 34% to 35% in constant currency, well ahead of the 31.5% consensus.
“The company provided stronger-than-expected fiscal Q4 2025 revenue guidance as more customers see increased use cases for Microsoft’s AI tech stack to assist customers with generating greater operational efficiencies,” Wedbush wrote.