Wall Street sets Microsoft stock price for next 12 months

Although there has been some anxiety about the data center boom, rising technological competition from China, and the ongoing trade war, Wall Street analysts have remained overwhelmingly bullish about Microsoft (NASDAQ: MSFT).

MSFT shares are considered a ‘strong buy’ overall, according to the latest ratings Finbold retrieved from the stock analysis platform TipRanks. Specifically, Microsoft has an average 12-month price target of $477.75, 20.87% above the latest closing price of $395.26.

Furthermore, there are no ‘sell’ ratings among the 29 experts represented over the last 3 months, while 26 consider Microsoft stock a ‘buy’ and three see it as a ‘hold.’

Simultaneously, the highest forecast would see MSFT rally 50.53% to $595, while even the lowest forecast sees an upside of 8.79% and a rise to $430.

Though the two most recent rating revisions, assigned by RBC and Jefferies in the early hours of May 1, came without a price target, both are bullish and recommend buying Microsoft shares.

Analyst optimism backed by strong quarterly Microsoft earnings

The strong positivity, and particularly the bullishness of the latest assessments, received strong backing after the April 30 closing bell. 

Microsoft’s latest quarterly report provided exceptionally strong numbers, demonstrating strong growth across the board and, once again, impressive with the Azure cloud results.

Revenue for the three months came in at $70.07 billion – nearly $2 billion above the expected $68.42 billion – and earnings per share (EPS) stood at $3.46, significantly better than the forecasted $3.22.

While a year-over-year (YoY) revenue increase of 16% is nothing to scoff at, Azure was even more impressive as its growth amounted to 33%, while most predictions stood in the range between 29% and 30%.

Although the implied operating margin proved somewhat below expectations, the miss was relatively minor at 43.35% actual versus the expected 43.5%.

Considering the figures are backward-looking and the results in the quarter were only partially affected by the economic chaos of the last 100 days, investors received particular reassurance from a strong forward-looking outlook.

What’s more, Microsoft reaffirmed its plans to continue investing tens of billions in artificial intelligence (AI) infrastructure, somewhat invalidating the uncomfortable predictions that data centers have become a bubble.

Microsoft stock soars on strong earnings

The strength of the result was immediately reflected in the market. After climbing just 0.31% to its latest closing price of $395.26 during the April 30 session, MSFT stock soared 8.44% in extended trading and is, at press time in the May 1 pre-market, changing hands at $428.61.

Should Microsoft shares maintain the rally by the morning bell, they will open up in the green on the year-to-date (YTD) chart on Thursday for the first time since January.

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