Deutsche Bank said in its latest research note that market concerns over Microsoft’s jump in capital spending, the return on AI investment, and customer concentration tied to OpenAI orders have become significantly overdone. The bank said Microsoft’s current valuation remains attractive and reiterated its Buy rating alongside a $550 price target.
The note also laid out Deutsche Bank’s expectations for Microsoft’s fiscal fourth quarter, which corresponds to the second quarter of the calendar year. It forecast revenue of $87.4 billion, up 14.3% year over year, and non-U.S. GAAP earnings per share of $4.17. Deutsche Bank expects Azure growth, measured in constant currency, to reach 40% to 41%.
The bank added that enterprise cloud migration, demand for AI computing capacity, and newly added data center capacity should continue to support growth. It also projected Microsoft 365 Commercial Cloud revenue growth of 15% to 16%, while paid Copilot seats could top 25 million by year-end.
Deutsche Bank said in its latest research note that investor concerns over Microsoft’s surging capital expenditures, returns on AI investment, and concentration in OpenAI-related orders are significantly overdone. The bank said the stock’s current valuation remains attractive and kept its Buy rating and $550 price target.
For Microsoft’s fiscal fourth quarter, which corresponds to the second quarter of the calendar year, Deutsche Bank expects revenue of $87.4 billion, up 14.3% from a year earlier. It also forecast non-U.S. GAAP earnings per share of $4.17.
Deutsche Bank said Azure growth on a constant-currency basis could reach 40% to 41%. It expects enterprise cloud migration, demand for AI compute capacity, and additional data center capacity to keep supporting growth. Microsoft 365 Commercial Cloud revenue is projected to rise 15% to 16%, and paid Copilot seats could exceed 25 million by year-end.
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