Microsoft Corp. (NASDAQ:MSFT) stock rose more than 3% in premarket trading Thursday after the technology giant reported better-than-expected quarterly results and issued an upbeat revenue forecast, supported by strong cloud and artificial intelligence demand.
The gains came despite broader market weakness. Nasdaq futures fell 1.15%, while S&P 500 futures declined 0.32%.
Analysts remained largely bullish on Microsoft, citing accelerating Azure growth, resilient enterprise software demand and the company's ability to fund massive AI investments.
Microsoft Beats Earnings Estimates, Issues Strong Forecast
Microsoft reported first-quarter revenue of $92.28 billion, up 19% year over year and above analysts' estimate of $90.70 billion. Earnings reached $4.89 per share, beating expectations of $4.72.
The company forecast second-quarter revenue of $96 billion to $97.1 billion, exceeding the $95.66 billion consensus estimate. Microsoft also expects quarterly capital expenditures to surpass $50 billion.
Azure revenue jumped 48% to $33.2 billion, highlighting continued demand for cloud and AI infrastructure.
Analysts See More Upside For Microsoft
Ahead of the results, D.A. Davidson Managing Director Gil Luria told CNBC that he slightly favored Microsoft over Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) and Amazon.com Inc. (NASDAQ:AMZN).
Luria expected Azure growth to accelerate and highlighted Microsoft's strong free cash flow, which could help finance AI investments without additional borrowing or equity issuance.
Jefferies analyst Brent Thill said following the results that accelerating Azure and Microsoft 365 growth, strong remaining performance obligations and lower-than-expected capital spending supported his bullish outlook.
Thill said Microsoft's next challenge is controlling AI infrastructure spending while maintaining growth. He also pointed to resilient operating margins and early-stage enterprise AI adoption.
Munster Flags Long-Term Software Risks
Deepwater Asset Management's Gene Munster told CNBC that Microsoft's software growth accelerated to 17% in September from 14% in June.
However, Munster questioned whether that pace could continue as AI reshapes demand for knowledge-work software.
He also noted that capacity constraints limited Azure's growth potential, reinforcing the need for continued infrastructure investment.
Analyst Ratings And Price Forecasts
Microsoft carries a consensus Buy rating, with an average price forecast of $614.08.
Piper Sandler maintained an Overweight rating and raised its price forecast to $650 on Oct. 29. Truist Securities maintained a Buy rating and raised its price forecast to $600 on Oct. 26, while Oppenheimer maintained an Outperform rating and increased its price forecast to $625 on Oct. 26.
MSFT Price Action: Microsoft shares were up 3.47% at $549.44 during premarket trading on Thursday. The stock is trading near its 52-week high of $553.72, according to market data.
