BMO Capital Markets has raised its price target on Microsoft Corporation (NASDAQ: MSFT) to $650 from $550, while reiterating its Outperform rating.
The tech giant, currently trading near its 52-week high of $518.29 and boasting a market capitalization of $3.81 trillion, continues to draw investor attention on the back of strong cloud growth and margin performance.
Microsoft shares have risen 21% in the year so far.
In its note, BMO Capital cited “an impressive quarter across the board” as the primary driver behind the price target revision.
A key highlight was Microsoft’s Azure platform, which reported 39% year-over-year constant currency growth in the June quarter.
The firm also noted Microsoft’s forward guidance, projecting 37% year-over-year constant currency growth in Azure for the September quarter.
Microsoft is trading at a relatively high price-to-earnings (P/E) ratio of 39.31.
However, the strength in cloud services and operational efficiency appears to be overriding valuation concerns for many analysts.
Operating income and cloud margins impress
BMO’s bullish sentiment is further reinforced by Microsoft’s strong profitability.
The company reported 22% year-over-year growth in operating income on a constant currency basis.
Importantly, this growth was achieved alongside just 5% year-over-year growth in operating expenses, benefiting from a more profitable cloud product mix.
The firm also emphasized Microsoft’s competitive advantage relative to other large-cap software players such as Oracle (NYSE: ORCL), SAP, and Salesforce (NYSE: CRM).
BMO pointed to Microsoft’s broad portfolio—including AI-driven offerings—and solid margin performance as key differentiators.
Other analysts echoed similar optimism. Oppenheimer raised its price target to $630, and Wolfe Research lifted its target even higher to $675, with both firms maintaining Outperform ratings.
Morgan Stanley (NYSE: MS) also increased its target to $582, citing the company’s resilient margin structure, which includes a 100 basis point increase in operating margins year-over-year.
Meanwhile, KeyBanc upgraded Microsoft to Overweight and issued a $630 price target, noting accelerated growth in the Azure cloud segment.
Microsoft’s solid quarterly performance, led by robust Azure growth and operational efficiency, continues to attract positive attention from analysts.
However, the tech giant must now navigate growing regulatory scrutiny that could shape the competitive dynamics of the cloud market moving forward.
Regulatory pressure mounts in cloud market
Amid the strong financial results and analyst upgrades, Microsoft is facing increased regulatory scrutiny in the UK.
The Competition and Markets Authority (CMA) has raised concerns over the company’s dominant position in the cloud computing space, alongside Amazon (NASDAQ: AMZN).
The CMA is considering whether to designate both companies with strategic market status, a classification that could lead to tailored operational conditions aimed at preventing anti-competitive behavior.
The investigation underscores ongoing global concerns about concentration in the cloud services industry, even as Microsoft and its peers continue to expand their offerings and influence.
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