Microsoft slides amid near-term headwinds, but Wall Street still bullish longer out
HJBC

Microsoft (NASDAQ:MSFT) is falling in premarket trading Wednesday on worries about a materially weaker PC market and softer numbers on the Azure side.
Shares are down 6.5%
post-earnings.
"MSFT: no rose colored glasses this was (CEO Satya) Nadella ripping the band-aid off on a disaster PC market and massive FX headwinds," Wedbush analyst Dan Ives tweeted. "Cloud story is firm but clearly seeing cracks in the armor in Redmond."
"The first shoe to drop or just a reset? We believe reset and remain positive on MSFT," Ives said.
Barclays analyst Raimo Lenschow, who keeps his Overweight on the stock, noted the drop in Q2 FY23 Azure guidance to 37% Y/Y from 42%.
"It seems that the macro uncertainty is slowing the migration of new workloads to the cloud and customers are also optimizing current cloud consumption patterns," Lenschow wrote in a note. "While there has been the fear of such a scenario for a while, MSFT guidance finally confirms these concerns."
"This will weigh on the MSFT story (a stock which has been as a hiding place for investors), but also on sentiment for all of software," he added. "Shares will likely react negatively in the short term, but we point out that management is still guiding for double-digit revenue and profit growth in constant currency, which remains impressive given the scale of MSFT, and should ensure relative outperformance."
Credit Suisse analyst Phil Winslow, who rates shares Outperform, said he views "the negative impact of the currently elevated optimization cycle as more temporary."
"Similar to past optimization cycles that weighed on growth for ~1-2 quarters, an upswing in new workloads then followed that drove growth back toward more normalized trends."
See why SA contributor Cavenagh Research says MSFT bulls are on shaky ground.