According to Evercore ISI analyst Kirk Materne, there is nothing fundamentally wrong with Microsoft. But investors still appear concerned as they wait for Azure’s expected acceleration in the second half of the fiscal year and wonder whether artificial intelligence spending will deliver the necessary returns.
“In short, we believe that (Microsoft’s) long-term (generative AI) opportunities remain optimistic and help support our confidence in the company’s ability to deliver both double-digit revenue and earnings growth in the near future.” Materne wrote. “Furthermore, the tactical concerns weighing on the stock today should dissipate as a turnaround in Azure approaches.”
He called this a “survive and advance” quarter for Microsoft, but also said that “the recent lull in the stock creates an attractive entry point for those looking ahead” to next calendar year.