Investing.com – Bank of America says sentiment towards Microsoft Corporation (NASDAQ:) is improving due to forceful growth drivers in its Azure cloud platform and Office suite. The brokerage maintained its “buy” rating and price target of $510, forecasting significant revenue growth in Q2 and accelerated momentum in FY25.
BofA forecasts second-quarter revenue of $68.6 billion, with potential growth from ongoing cloud migration projects to Azure and ongoing E3/E5 upgrade cycles, particularly for security features related to M365 Copilot adoption. Azure’s year-on-year growth could reach 32.5% in constant currency in a growth scenario, driven by solid AI contributions.
“We expect second-quarter results to improve stock sentiment given Azure’s likely prospects for accelerated growth in the third quarter. We also believe that the company is likely to raise its margin outlook for FY25,” the analyst said.
Since Microsoft typically updates its full-year margin forecast in the second quarter, analysts expect Microsoft to raise its full-year margin forecast based on a 140-basis-point margin augment in the first quarter.
“As core business growth accelerates with AI contributions (both in applications and infrastructure) and improved margin prospects, it should become more clear that the ROI on Azure will trend nicely.”
BofA’s top pick Microsoft stock could see further upside as the company continues to benefit from AI-driven growth in applications and infrastructure.
