After the closing bell on Tuesday, tech-giant Microsoft (NASDAQ: MSFT) posted highly anticipated Q2 earnings. With rumors of a bear market weighing on tech sentiment, investors turned to Microsoft in hopes that solid growth might provide some relinquishment.
Recently, investors have been increasingly fastidious when it comes to earnings; with market concerns still looming over the heads of bulls. Following the after-market earnings, the stock dropped on the initial release, yet after the 2022 guidance conference call – investor confidence spurred gains – with the stock currently at a premarket gain of 5%.
Analysts across the board took notice, with the industry giant reiterating its prominent position across multiple verticals. Over at Deutsche Bank, Microsoft maintained its Buy rating and $390 target with what the firm called a ‘solid’ Q2 and ‘even better guidance’. The firm referred to the company’s strategic long-term commitments that are underpinning growth in commercial clients; with analyst Brad Zelnick sticking by his ‘firmly intact’ thesis.
Commercial strength was also a key theme at Wells Fargo, with analyst Michael Turrin also pointing to Azure’s long-term deal activity and stronger Q3 outlook. Reassurance stemming from questionable Azure and IC deceleration was attested to FX headwinds, a strong outlook, and confidence Azure will bounce back into Q3. Turrin defines Microsoft as ‘well-entrenched’ within critical end markets. An overweight rating and a price target of $425 were upheld.
The story was much of the same at Morgan Stanley, however with a raised price target from $364 to $372. Analyst Keith Weiss found particular insight in Microsoft’s ability to navigate a weakening investor narrative surrounding software demand with clear-cut revenue growth outlines not just the company’s firm positioning, but also a healthy spending environment.
Digital transformation is still leading the way in which Microsoft is able to grow in varied directions; with commercial contracts growing at an impressive rate, it’s clear that companies are still chasing the curve of tech-driven communication, collaboration, and integration; of which Microsoft has industry-leading credentials. The company didn’t go into details regarding their late acquisition of Activision Blizzard, but the following quarter should shed some more light on the deal.
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Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.