Microsoft surges, analysts hail 'cloud results heard around the world'
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Microsoft (NASDAQ:MSFT) shares jumped more than 6.5% in early trading on Wednesday as Wall Street analysts reacted to the tech giant's fiscal third-quarter results and heaped praise on its Azure cloud computing unit.
Macquarie analyst Sarah Hindlian-Bowler, who raised her rating to outperform from neutral and boosted the per-share price target to $325, said the results were a "solid beat despite the macro environment," citing strength in search and news advertising, Office, servers and intelligent cloud.
"Overall, with the company able to buck the macro, its opportunities to embed Generative Al into Office, Bing, and many other areas of the company suggest meaningful long term business opportunities," Hindlian-Bowler wrote in an investor note.
During the third quarter, Microsoft (MSFT) earned an adjusted $2.45 per share on $52.86B in revenue, topping estimates of $2.33 per share and $51B in revenue.
Looking ahead, Microsoft (MSFT) expects fourth-quarter revenue of $55.4B, topping the $54.7B that analysts expect. 
Datadog (DDOG), Snowflake (SNOW) and MongoDB (MDB) rose sharply following Microsoft's (MSFT) and Google's (GOOG) (GOOGL) cloud results.
Wedbush Securities analyst Dan Ives praised the Satya Nadella-led Microsoft (MSFT), especially in light of the uncertain environment heading into the results. 
"It's clear that in Redmond's enterprise backyard the company is gaining more market share on the cloud front with many enterprises making this transformational shift on the shoulders of Microsoft," Ives wrote in an investor note. "Cloud growth and the overall outlook for the June quarter was solid and much better than feared given recent noise in the market and will be music to the ears of investors this morning digesting results."
BMO analyst Keith Bachman, who also upgraded Microsoft (MSFT) shares to outperform, stated he now has "higher conviction" that any headwinds to Azure are likely to moderate by the end of the year, while opportunities in artificial intelligence can help the longer-term. 
"While the stock is not inexpensive, we think the durable growth opportunities warrant a premium valuation," Bachman wrote.
Citi analyst Tyler Radke reiterated the firm's buy rating on Microsoft (MSFT) and raised its per-share price target to $340 after the results, noting that the cost discipline the company has shown is likely to make it more profitable. 
In addition, Radke added that Microsoft (MSFT) is likely to continue involving generative artificial intelligence into its products and services and revenue growth should accelerate based on easier comparisons and continued execution.
Seeking Alpha analyst Tradevestor called Microsoft's (MSFT) results a "monstrous quarter by almost all means" and added CEO Nadella "may go down as the most transformative CEO in history."
Analysts are largely cautious on Microsoft (MSFT). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates MSFT a HOLD.
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