TD Cowen Sees Microsoft (MSFT) Shares Range-Bound Ahead of Earnings

Core Viewpoint - Microsoft Corporation is recognized as a significant player in the AI sector, with recent price target adjustments reflecting concerns over growth acceleration due to capacity constraints [1][3]. Group 1: Price Target and Ratings - TD Cowen has lowered its price target for Microsoft to $625 from $655 while maintaining a Buy rating, indicating confidence in the company's long-term potential despite short-term challenges [1][3]. - The firm anticipates a potential upside of about 2 points to their 37% constant currency Azure estimates, suggesting stable or strengthening demand for GPU and CPU infrastructure [2]. Group 2: Growth Prospects - There is a suspicion that the lack of growth acceleration, primarily due to capacity constraints, will keep Microsoft shares range-bound in the near term [2][3]. - However, TD Cowen remains optimistic about Microsoft's ability to serve AI workloads and sees potential for growth acceleration in the second half of 2026 [3]. Group 3: Company Focus and Market Position - Microsoft provides AI-powered cloud, productivity, and business solutions, emphasizing efficiency, security, and advancements in AI technology [4]. - While Microsoft is viewed as a strong investment, there are suggestions that other AI stocks may offer greater upside potential with less downside risk [4].