Sell-side on Microsoft (MSFT): Delivered solid results and healthy guide, but the stock is down about 7%, as Azure growth and next quarter guide disappointed expectations

Morgan Stanley maintains PT at USD 650 and keeps ‘Overweight’ rating, but removed as Top Pick; contends MSFT reported "another remarkably strong" Q, but investor focus has narrowed more tightly towards areas seen as the key indicators of GenAI fitness (Azure growth & M365 Commercial Cloud), and Azure growth at 38% “only” exceeded guidance by 1ppt, disappointing investors expecting a beat in the 2-3% range.
Bernstein lowers PT to USD 641 (prev. 645) and keeps an ‘Outperform’ rating; highlights the Azure growth slightly short of expectations, but management stated that Azure could have grown over 40%, but are constrained by capacity and are prioritising first party apps and R&D over near-term Azure growth. Bernstein thinks this is a hard but necessary decision for Cos. long-term value creation.
Citi lowers PT to USD 635 (prev. 660) and keeps a ‘Buy’ rating; viewed the report as mixed and has slightly reduced Azure estimates following the print but says CoPilot momentum is accelerating.
Wells Fargo lowers PT to USD 615 (prev. 630) and keeps an ‘Overweight’ rating; Q2 results are likely to add to debates around Azure capacity constraints, thinks the Q3 guide suggests potential for growth to improve in H2 2026 and beyond as more capacity comes online.
Barclays lowers PT to USD 600 (prev. 610) and keeps an ‘Overweight’ rating; the MSFT story "will see a slight rethink" post report. While AI momentum and extra capacity drove higher Azure growth, Co. is now using new capacity for more of its first-party offerings, which means upside "will need to show up differently".
Goldman Sachs lowers PT to USD 600 (prev. 655) and keeps a ‘Buy’ rating; stock reaction reflected another quarter of higher-than-expected capex without a step-up in Azure growth rates. Increased investment in compute for first-party AI applications and internal R&D is positioning Co. for stronger strategic and financial returns over the medium-term despite near-term concerns.
KeyBanc lowers PT to USD 600 (prev. 630) and keeps an ‘Overweight’ rating; repeated familiar themes that Azure growth was disappointment expectations and next Q guide was even less inspiring. Adds that the word of worry shifts from capacity to allocation.
Piper Sandler lowers PT to USD 600 (prev. 650) and keeps an ‘Overweight’ rating; while investors remain myopically focused on Azure and Capex, mgmt. made it clear its focus remains on the broader platform, which means allocating capacity towards Azure, 1st party apps, and R&D. Piper remains bullish on MSFT.
Baird lowers PT to USD 540 (prev. 600) ad keeps an ‘Outperform’ rating; while MSFT’s OpenAI concentration has been a concern, it is encouraged with the 28% commercial remaining performance obligation growth excluding OpenAI.