《Large Banks》 Huiyan believes Azure will continue driving strong growth for Microsoft (MSFT.US), with a rating of “Buy”

HSBC’s research has published a research report saying that Microsoft (MSFT.US) will announce results for the fourth quarter of fiscal year 2026 ended June 30 in the near term. It is expected to continue strong growth, driven by Azure. Total revenue in the fourth quarter is expected to rise 16.8% year over year to $89.3 billion, above the company’s guidance, with Azure growth of approximately 39.6%. The firm said that during the quarter, a shortage in GPU supply led to prices higher than expected, leaving room to raise Azure’s business outlook. It estimates that Microsoft’s non-GAAP operating profit margin will be roughly flat year over year at 44.9%. For capital expenditures, HSBC research expects Microsoft’s fourth-quarter capex to increase to $41.0 billion. Excluding the special period of a surge in AI-driven capex across fiscal years 2025 to 2027, the free cash flow CAGR for fiscal years 2023 to 2030 is expected to reach 13.1%, which is attractive.

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HSBC research has slightly lowered its target price from $571 to $567, corresponding to a projected forward 12-month non-GAAP P/E of 29x, and maintained a “Buy” rating. (gc/da)(US stocks are live streaming quotes; OTC market stocks are excluded, and data is delayed by at least 15 minutes.)