Goldman Cuts Microsoft (MSFT) Target after Earnings, Keeps Buy Rating

Microsoft Corporation (NASDAQ:MSFT) is one of the Buzzing AI Stocks on Wall Street. On January 29, Goldman Sachs analyst Gabriela Borges lowered the price target on the stock to $600.00 (from $655.00) while maintaining a Buy rating. The price target adjustment follows Microsoft’s second-quarter earnings report.

Microsoft reported revenues of $81 billion, representing 17% year-over-year growth and topping analyst expectations by 1%. Its non-GAAP earnings per share reached $4.41, up 23% year-over-year and 5% above consensus estimates.

The company reported Azure Cloud growth of 38% in constant currency, modestly ahead of Street’s estimate of 37%. It guided third-quarter Azure growth to a range of 37-38%, compared with analyst expectations of 36%.

The firm noted that the stock’s after-hours dip was due to higher-than-expected capital expenditures of $37.5 billion, which exceeded analyst projections by 9% when including financial leases-without a commensurate uplift in Azure growth.

Overall, the firm is a buy on MSFT stock despite these concerns, arguing that Microsoft’s prioritization of compute capital expenditures for first-party applications like Copilot and internal R&D over short-term Azure revenue will ultimately reinforce its AI strategy and deliver better returns over the medium term.

Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements.

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