BofA: Raises Microsoft target price to $515 on strong Q3 earnings and outlook

BofA: Raises Microsoft target price to $515 on strong Q3 earnings and outlook

Bank of America (BofA) has raised its price target for Microsoft (MSFT) to $515 following the tech giant's robust third-quarter earnings report. The financial institution cited strong performance across all segments, particularly in cloud computing and AI, to justify the upward revision [1].

Microsoft's revenue for the quarter ended March 31, 2025, reached $70.1 billion, marking a 13% year-over-year increase. The company's cloud and AI services, notably Azure, drove significant growth, with revenue up 33% year-over-year [2]. This performance was bolstered by a notable 33% year-over-year growth in Azure revenue, where AI contributed approximately half of the growth [3].

The company's operating income and net income also saw substantial increases, up 16% and 18% respectively. Microsoft's forward-looking guidance for the fourth fiscal quarter of 2025 was also stronger than expected, projecting continued growth in AI and cloud services [1].

The tech giant's focus on AI and cloud infrastructure has been a key driver of its success. Microsoft's plan to spend $80 billion on infrastructure in fiscal 2025 underscores its commitment to these areas [1]. The company's capital expenditures have been increasing quarter over quarter, supporting its AI monetization strategy within its cloud services [2].

Despite the strong performance, BofA cautions that potential AI investment returns and costs could pose risks. However, the analyst firm remains bullish on Microsoft's growth trajectory in the competitive tech landscape [1].

Microsoft's stock has been performing well, with shares up nearly 9% in recent trading to about $430, pushing them into positive territory for 2025 [1]. Several analysts have raised their price targets for the stock, with Wedbush moving to $515 and Jefferies boosting its target to $550 [1].

References:
[1] https://finance.yahoo.com/news/microsoft-stock-rockets-higher-analysts-164917135.html
[2] https://www.investing.com/news/analyst-ratings/wedbush-lifts-microsoft-stock-target-to-515-on-strong-ai-growth-93CH-4015667
[3] https://www.microsoft.com/en-us/investor/earnings/fy-2025-q3/press-release-webcast