Microsoft(US:MSFT) Guotai Junan Securities·2024-11-03 23:40Investment Rating - The report maintains an "Overweight" rating for Microsoft (MSFT.O) [1][3]. Core Insights - Microsoft's FY25 Q1 performance slightly exceeded expectations, with revenue growth stabilizing and capital expenditures continuing to expand, particularly in AI computing capacity [1][3]. - The company reported Q1 revenue of $65.6 billion, a year-on-year increase of 16%, and a GAAP net profit of $24.7 billion, up 11% year-on-year [3][15]. - Adjustments to revenue forecasts for FY2025E-FY2027E were made, with projected revenues of $278.7 billion, $315.6 billion, and $355.8 billion respectively [3][15]. Summary by Sections 1. Performance Overview - Revenue and profit slightly exceeded expectations, with capital expenditures on the rise [11][15]. - Q1 capital expenditures reached $20 billion, a 78.6% increase year-on-year, with half allocated to computing infrastructure [3][11]. 2. Revenue by Segment - Revenue from Productivity and Business Processes grew by 12% year-on-year, while Intelligent Cloud revenue increased by 20% [12][13]. - Azure and other cloud services saw a 33% year-on-year growth, driven by AI services contributing 12 percentage points to Azure's growth [3][12]. 3. Earnings Forecast and Investment Recommendations - The report projects adjusted GAAP net profits of $103.4 billion, $113.5 billion, and $125.4 billion for FY2025E-FY2027E [3][15]. - A target price of $484 is set based on a FY2025 Forward PE of 35 times [3][15].