Microsoft Blasts Past Earnings — What's Next for MSFT?

Core Insights - Microsoft shares increased over 6% following a strong earnings report, driven by AI and cloud growth [1] - The stock has risen 21% year-to-date and nearly 30% since April [1] Financial Performance - Earnings per share (EPS) of $3.65 exceeded expectations of $3.35, marking a 23% year-over-year increase [3] - Total revenue reached $76.44 billion, surpassing expectations of $73.81 billion, and was 18% higher year-over-year [4] - Azure cloud computing revenue grew by 39%, up from 34.4% in FY 2024, with total Azure revenue reported at $75 billion for the full year [4] Capital Expenditures - Microsoft reaffirmed its forecast for $60 billion in capital expenditures, primarily driven by AI investments [5] Analyst Ratings and Price Targets - Dan Ives of Wedbush raised the price target for Microsoft stock to $625 from $600, indicating a potential 15% gain from the current price [6] - The average 12-month stock price forecast is $596.82, suggesting a 10.88% upside [7] Market Trends - Microsoft stock is in a sustained uptrend, characterized by higher highs and higher lows since late April [9] - Indicators suggest potential slowing momentum, with the MACD line narrowing and the RSI over 70, indicating overbought conditions [10] Investment Strategies - Investors may consider waiting for the RSI to dip below 65 or for the stock price to retest the 50-day simple moving average before taking long positions [11] - A bullish call spread strategy is suggested for traders looking to capitalize on current price action [12]