Microsoft Stock Rallies On Q3 Strength Of Azure: Analyst Says Company Is 'Sole AI Leader In Both Apps And Infrastructure'

Microsoft Corporation MSFT analysts highlight a strong showing by Azure as the key factor that powered the tech giant’s better-than-expected third-quarter performance.

Microsoft Analysts: TD Cowen analyst Derrick Wood maintained a Buy rating on Microsoft and raised the price target from $475 to $490.

KeyBanc analyst Jackson Ader maintained a Sector Weight rating with no price target.

JPMorgan analyst Mark Murphy maintained an Overweight rating and raised the price target from $465 to $475.

Piper Sandler analyst Brent Bracelin maintained an Overweight rating and raised the price target from $435 to $475.

Bank of America analyst Brad Sills reiterated a Buy rating and raised the price target from $480 to $515.

Scotiabank analyst Patrick Colville reiterated a Sector Outperform rating and raised the price target from $470 to $500.

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TD Cowen on MSFT: A rebound in non-AI growth and strong AI demand were highlights in the third quarter for Wood according to a new investor note.

The analyst said Azure, cloud and AI saw strong demand in the quarter. For Azure, growth of 35% year-over-year was well above guidance, Wood said.

"MSFT attributed upside mostly to better-than-expected non-AI workload growth, driven by enterprise strength and accelerating demand for cloud migrations," Wood said.

Wood said the strength of Azure reverses several bumpy quarters and could shift the narrative on the stock.

"MSFT appears well positioned in key secular growth markets, particularly Public Cloud with its Azure platform, which we expect to be the company's main growth driver."

KeyBanc on MSFT: Microsoft reported its "cleanest quarter in a while," Ader said in a new investor note.

The analyst said the right items delivered the upside.

"Azure growth was the standout at 35% growth in constant currency on the back of cleaning up some execution that hurt last quarter and some capacity being unlocked earlier than expected," Ader said.

Ader said his recent downgrade of the stock "looks pretty foolish right now."

"The quarter does highlight a principal risk in not being overweight MSFT right now, which is that we have no visibility into capacity unlocks."

The analyst said Microsoft's return on investment math for AI is still difficult to make sense of and there could be better stocks to play "offense" with.

JPMorgan on MSFT: Investors may have been too pessimistic ahead of Microsoft's earnings, Murphy said in a new investor note.

"Azure performance a ray of light," Murphy said.

The analyst said the hard data looks more resilient than the soft data and Microsoft's Azure and AI strength showed up in the quarter.

"The apparent lack of any tangible macro stress or strain, including commentary that demand signals across the commercial business were consistent in April and are expected to remain so moving forward."

Murphy said Microsoft's AI Services are showing upside faster than expected.

"Microsoft has pulled ahead of the pack with a state-of-the-art cloud platform."

Piper Sandler on MSFT: Third-quarter results were "better-than-feared," Bracelin said in a new investor note.

"Azure growth surprisingly accelerated to 35% on a combination of non-AI outperformance and continued AI momentum," Bracelin said.

The analyst said Microsoft's strong operating cash flow provides flexibility for increased capex, dividends, M&A or stock buybacks in the future.

"The world's largest cloud franchise with a first-mover advantage in Gen AI," Bracelin said of Microsoft.

Bank of America on MSFT: Azure and AI were the highlights for Sills.

"View Microsoft as the sole AI leader in both apps and infrastructure," Sills said.

The analyst said Microsoft has balanced cloud and AI growth that helped boost Azure in the quarter.

"Q3 results suggest that ROI on capex is coming into view sooner than expected."

Scotiabank on MSFT: Microsoft is bringing "a new golden age driven by Azure," Colville said in a new investor note.

The analyst said the third quarter was a standout quarter with standout guidance.

"Azure F3Q growth was a blowout, driven by unleashed AI spend and traditional workloads up-ticking Q/Q," Colville said.

The analyst said the quarterly results could shutdown the "AI slowdown bear narrative."

"With MSFT trading not far off 5-year valuation lows, we think now is the time to step back in."

The analyst said Microsoft has a strong future as a "leading horseman of the AI revolution."

MSFT Price Action: Microsoft stock is up 8.5% to $428.93 on Thursday versus a 52-week trading range of $344.79 to $468.35. Microsoft stock is up 2.4% year-to-date in 2025.

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