Jefferies analysts recently issued a note to investors, projecting a cautious stance from Microsoft (NASDAQ: MSFT) in its upcoming F4Q earnings guidance, scheduled for release on Thursday, April 25. Despite maintaining a Buy rating and a $550 price target on MSFT, the investment firm anticipates a challenging quarter-over-quarter comparison, with expected year-over-year constant currency growth of 14% partially offset by a 3-point increase in competition. However, they believe the acquisition of Activision Blizzard (ATVI) will provide a 3-point boost.
Regarding the impact of artificial intelligence (AI), Jefferies analysts predict a gradual adoption curve, with significant growth and revenue uplift expected in 2025. They emphasize the growing demand for Azure AI services and the increased workload as more models enter production. The analysts also expect Microsoft’s Copilots to gain traction and contribute to the company’s goal of achieving $10B in AI annual recurring revenue (ARR) by F4Q. Overall, Jefferies remains optimistic about Microsoft’s position as a leader in the AI market, poised to capitalize on opportunities in both infrastructure and applications.
