Microsoft (MSFT) PT Raised to $380 at Bernstein, says Azure could become a bigger and more important hyperscale provider than AWS

Bernstein analyst Mark Moerdler raised the price target on Microsoft (NASDAQ: MSFT) to $380.00 (from $342.00) while maintaining an Outperform rating.

"Microsoft made a big bet on Azure, investing aggressively in a global footprint and technology innovation. This past quarter, Azure decelerated again, but this was in line with expectations (delivered 31% in constant currency for growth in the quarter and guidance of 26%-27% for next quarter). Additionally, we felt management commentary was optimistic, particularly the comment that AI services are going to contribute ~1% to incremental growth of Azure next quarter. This is a huge number, and while AI has been part of the Azure story for years, for AI to already generate 1% incremental growth shows that demand for AI, especially post the GPT announcements, is going to be a big driver of Azure. Microsoft doubled down on AI at their recent Build developer conference announcing an AI development stack, architecture and wide range of tools, many of which will be available starting in June. We see all of this as indicators that Microsoft has taken the AI mantel from Google, and Azure could become a bigger and more important hyperscale provider than AWS. If this trend continues, then AI will be a very large driver of the size of Azure's long term revenue and will require reevaluation upwards of how big Azure could be."

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