Microsoft rises as analysts praise 'bullish guidance heard around the world'
Jean-Luc Ichard

Microsoft (NASDAQ:MSFT) shares rose on Wednesday after it said fiscal 2023 would see double-digit revenue and operating income growth, calming fears that the weakening global economy would impact the tech giant.
Wedbush analyst Dan Ives, who has an outperform rating on Microsoft (MSFT), noted that the guidance is likely to be seen as a "major boost" for Microsoft bulls and for the tech sector in general.
"This will be bullish guidance heard around the world and on the Street as the market digests this positive commentary in a darkening macro," Ives wrote in a note to clients, adding that Microsoft (MSFT) is seeing "firm customer demand" and clear strength on the cloud. Ives lowered his price target to $320 from $340, citing a lower multiple.
Microsoft (MSFT) shares rose nearly 4% to $261.99 in premarket trading.
Evercore ISI analyst Kirk Materne noted there were a lot of "moving parts" in the guidance, citing foreign exchange issues and supply chain issues coming out of China, but the underlying trends are still "sound."
"Clearly, the issues in [More Personal Computing] and in areas like advertising are going to remain headwinds in the near term, but we believe that Microsoftâs initial [2023] guidance of double-digit revenue and operating income growth (on both a reported and [constant currency] basis) helps support the long-term bull thesis," Materne, who has an outperform rating and a $330 price target, explained.
During the fourth quarter, Microsoft (MSFT) said More Personal Computing, which accounted for $16.6B in revenue during the period, saw a negative impact of $300M from China's COVID-related shutdown earlier this year.
Materne added that it's possible Microsoft (MSFT) shares could remain "range bound" in the near term, but the company did "a solid job threading the needle in terms of the outlook (i.e. not too hot, not too cold)."
Goldman Sachs analyst Kash Rangan noted that the company's fundamental story is intact, as Microsoft Cloud surpassed a $100B annual run rate and now accounts for 50% of total revenue.
Azure's guidance growth of 43% implies "only" a 3% sequential deceleration and overshadowed the 1% miss in the fourth quarter. Other areas, such as Office 365 and Commercial RPO also showed healthy growth, at 19% and 35% in constant currency. 
The company's ability to grow, but do so with "intense execution," according to comments made by Chief Executive Satya Nadella on the earnings call, was also reassuring. 
"We believe Microsoftâs cost discipline can also support double-digit [2023] EPS gains despite a drag from [foreign exchange] and a slightly higher tax rate (19%), which will be largely mitigated by a beneficial accounting change and share buybacks," Rangan explained.
Last week, it was reported that Europe's antitrust regulator was looking into whether Microsoft's (MSFT) planned $69B purchase of Activision (ATVI) may shut out rivals.