Microsoft is still BofA's top pick as firm says Azure, Office strength offset by PC weakness
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Microsoft (NASDAQ:MSFT) is slated to report fiscal fourth-quarter results on July 26 and investment firm Bank of America reiterated that the tech giant is still its top tech pick, despite expected weakness from the PC.
"Partner commentary suggests solid sustained workload migration to the Azure cloud platform from pull-through across Power Apps, Dynamics, Server Annuity/hybrid and Office 365," analyst Brad Sills wrote in a note to clients. 
However, Sills, who has a buy rating on Microsoft (MSFT) shares and a $345 price target, noted that there could be as much as $300M-$400M in weakness from the firm's $14.7B estimate to its More Personal Computing group, which houses Windows, "given lower PC shipments in calendar Q2."
"We believe expectations for a muted [fourth-quarter] are largely priced into the shares, with the stock trading at 22x [expected 2023] [free cash flows]," the analyst added. 
Microsoft (MSFT) shares rose slightly more than 1% to $260 in premarket trading on Monday.
Sills added that he expects Microsoft (MSFT) to generate $52.3B in revenue for the quarter, adjusted after the company said in June that the quarterly results were likely to see a $460M negative impact from foreign exchange.
Delving deeper, Sills added that Azure should grow 48% year-over-year on a constant currency basis, but there could be a 3%- 4% impact from foreign exchange, translating to a real growth rate of 44%-45%.
Last week, Netflix (NFLX) said that it had picked Microsoft (MSFT) to be its global advertising sales and technology partner as the streaming giant gets set to offer an advertising-supported tier.