Microsoft back on offense as quarter shows strong AI demand. Wall Street sees big stock gains ahead

Microsoft appears bound for a bounce as its latest quarterly report shows signs its artificial intelligence strategy will power revenue higher in the future, according to several analysts on Wall Street. The software giant earned $4.27 per share after adjustments in the fiscal third quarter quarter, topping the $4.06 per share expected by analysts surveyed by LSEG. Its revenue came in at $82.89 billion, outpacing the consensus estimate of $81.39 billion. Despite the stronger-than-expected report , shares declined nearly 5% in Thursday's session. One concern is rising spending. Microsoft expects its capital expenditures to balloon to $190 billion by the end of this year due to surging memory costs. Investors also are skeptical about the pace of its future growth. However, some analysts found evidence to be more bullish on the stock. "We see this quarter as a meaningful first step in reversing the stock's multi-quarter period of underperformance as Microsoft disclosed several milestones to directly address medium-term investor concerns," Goldman Sachs analyst Gabriela Borges said Thursday in a note to clients. She cited accelerating revenue growth at its Azure and Microsoft 365 businesses, its evolving pricing model and the tangible data the company shared for her view. Borges has a buy rating on Microsoft with a $610 price target on its shares, implying 44% upside from Wednesday's close. …