Microsoft Corp (MSFT)

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BofA has 'more conviction' about Microsoft's durable growth from cloud and AI
By: Investing | December 14, 2023

BofA analysts lifted the Microsoft (NASDAQ:MSFT) price target to $430 from $415 per share in a note Thursday, reiterating a Buy rating on the stock.

The firm's note states that the investment bank is now more convinced about the company's durable growth from its cloud and AI products.

BofA met with the CFOs of Microsoft’s business units at Microsoft’s Redmond, WA, headquarters on Tuesday. "We come away from the meetings with higher conviction on the durability of growth in the core Office and Azure growth franchises," analysts said.

"We believe that there is potential for commercial office to accelerate from the current mid-teens growth level in the coming quarters from the gradual contribution from the new M365 copilot. We estimate that each 1% penetration represents $576 million revenue and 1.5% incremental growth," analysts added.

The investment bank cited the Azure business, the ongoing ramp of OpenAI, and the potential for improving public cloud workload migration exiting the tougher macro as factors likely to drive upside to the firm's estimates for mid-20s growth.

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