Wedbush's Dan Ives Lauds Microsoft's 'Masterpiece Quarter,' Says CEO Nadella's Guidance 'Should Be Hung In The Louvre'

Zinger Key Points
  • Microsoft is in early innings of "major monetization" opportunity, with 60% installed base looking to implement AI functionality, he said.
  • Copilot monetization is playing out and further acceleration is likely in fiscal year 2024, he adds.

Software giant Microsoft Corp. MSFT reported better-than-expected fiscal year 2024 second-quarter results on Tuesday, prompting Wedbush analyst Daniel Ives to reaffirm his optimistic outlook on the company.

Analyst’s Take: Ives maintained an Outperform rating and set a $450 price target for Microsoft stock.

Microsoft’s fourth-quarter earnings and revenue were driven by substantial investments in integrating artificial intelligence (AI) into its overall portfolio to spur growth, according to Ives. “This was another masterpiece quarter and guidance from [Satya] Nadella that should be hung in the Louvre,” he said. 

Ives anticipates the results will have a significant ripple effect across the tech industry on Friday.

Ives highlighted that Microsoft is in the early stages of a “major monetization” opportunity, as more than 60% of its installed base aims to implement AI functionality across the entire enterprise and commercial landscape in the coming years.

See Also: Best Artificial Intelligence Stocks

Why It Matters: With Microsoft intensifying its AI strategy, Ives mentioned the notable demand generated by Copilot, stating that its monetization is progressing, and further acceleration is expected in fiscal year 2024.

In terms of specific business segments, Azure’s public computing service revenue experienced a 30% increase, surpassing the 27% consensus estimate, with AI transformation contributing to an acceleration in deal flow, according to Ives. 

“The company continues to infuse AI across every layer of the tech stack to generate strong profitable growth over the near-term with Copilot an additional high octane growth driver to the MSFT story,” he said.

Ives concluded by characterizing the third-quarter guidance as “solid.”

Microsoft Price Action: Microsoft ended Tuesday’s session down 0.28% at $408.59 and lost an incremental 0.33% in after-hours trading, according to Benzinga Pro data.

Read Next: Tech Titans Microsoft, Apple Lead ‘Magnificent Seven’ Earnings Wave This Week: Can Mega-Caps Ignite Market Optimism?

Image Created with artificial intelligence on MidJourney and The Art of Pics on Shutterstock

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: Analyst ColorEarningsEarnings BeatsEquitiesReiterationTop StoriesAnalyst RatingsTechDaniel IvesExpert IdeasSatya NadellaStories That MatterWedbush
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!