Microsoft price target lowered to $500 from $501 at Bernstein

Bernstein analyst Mark Moerdler lowered the firm’s price target on Microsoft (MSFT) to $500 from $501 and keeps an Outperform rating on the shares. The story is relatively well understood with the Street focused on Azure growth, whether the AI tailwind is happening, sustainability of Office 365 growth, and margins, but Bernstein says the Street will likely be distracted as Microsoft re-segmented the business and consensus estimates do not fully reflect the re-segmentation and optics will look “weird” as growth rates change, the analyst tells investors in a research note. Fundamentally nothing has changed other than the reporting, Bernstein argues, saying that Cloud, and especially Azure, is a big driver of growth, and if Gen AI is successful anywhere, Microsoft is the most likely candidate.