Microsoft stock earns 2 upgrades as FQ3 report highlights AI potential

Microsoft (NASDAQ:MSFT) shares trade nearly 8% higher in pre-market Wednesday after the company delivered better-than-expected earnings for its third fiscal quarter.

Moreover, at least two Street analysts raised their recommendation on MSFT stock, citing a massive artificial intelligence (AI) opportunity that lies in front of the Redmond–based tech titan.

“We believe MSFT will continue to outperform thanks to growth, earnings, new business opportunities with Generative Al, and what we view as growing likelihood of Activision closing,” Macquarie analysts said in an upgrade note.

It is worth noting that the UK’s top antitrust watchdog today vetoed Microsoft’s $69 billion takeover of Activision (NASDAQ:ATVI).

Elsewhere, BMO analysts upgraded to Outperform, also highlighting the company’s focus on long-term AI opportunity.

“We downgraded MSFT last quarter due to concerns about Azure growth in the near/ medium term. We are upgrading the stock to Outperform due to higher conviction that Azure growth headwinds will moderate by the end of CY23 and AI can help support longer-term growth, as we outlined in our recent deep dive Azure AI note,” the analysts said in a note.

“Further, we think Office growth can remain healthy, helped by CoPilot. Our new target price is $347. While the stock is not inexpensive, we think the durable growth opportunities warrant a premium valuation.”