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Microsoft's Strong Fiscal Q4 Results, Guidance Counter AI Disruption Narrative, Oppenheimer Says

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Microsoft (MSFT) reported solid fiscal Q4 results and guidance, with its Azure, M365 Cloud and Copilot businesses reflecting rapid growth, countering the AI disruption narrative, Oppenheimer said Thursday.

However, capital expenditure efficiency ratios and gross margin continue to deteriorate due to ongoing heavy investments in data centers to support increasing demand, the integration of lower margin AI into products and a higher Azure mix, according to the note.

Microsoft expects fiscal Q1 Productivity and Business Processes revenue of $36.7 billion to $37.0 billion, above the $36.6 billion consensus. It projects Intelligent Cloud revenue of $40.95 billion to $41.25 billion, compared with the $40.11 billion consensus. Fiscal Q1 capital expenditure is expected to be more than $50 billion, above the $45.7 billion consensus, the note added.

Oppenheimer kept an outperform rating on Microsoft with a price target of $515.

Shares of Microsoft rose more than 15% in Thursday trading.

Price: $455.64, Change: $+65.10, Percent Change: +16.67%

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