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Microsoft Stock: What’s Ahead in 2022?
Stock Analysis & Ideas

Microsoft Stock: What’s Ahead in 2022?

The selloff in tech stocks has led to a pullback in Microsoft (NASDAQ:MSFT), which is down about 10.4% this year. Meanwhile, Microsoft recently delivered better-than-expected Q2 financials. However, it failed to give a significant boost to its stock price due to the sequential deceleration in the growth of Azure and other cloud service revenues. 

Now What? 

The growth of Microsoft Azure and other cloud services revenue has decelerated on a sequential basis over the past two consecutive quarters. 

Nevertheless, Microsoft expects Azure’s growth to accelerate on a constant currency basis in the coming quarter. 

During the Q2 conference call, Microsoft’s CFO Amy Hood stated that Azure revenue growth will be “up sequentially in constant currency” in Q3 on the back of the “Azure consumption business, with strong growth on a significant base.”

Overall, Microsoft expects its Q3 revenues to range between $48.5 to 49.3 billion, well ahead of the Street’s estimates of $48.23. Moreover, the company expects its FY22 operating margins to increase year-over-year.

In response to its guidance, Gregg Moskowitz of Mizuho Securities stated that “F3Q revenue guidance was much better than anticipated, and includes expectations for some Azure CC revenue acceleration. FY22 OM guidance was also raised.” 

Moskowitz added that Microsoft’s “growth opportunities over the medium-term and beyond are greater than many realize, and that MSFT is positioning for materially greater success in cloud.” 

Along with Moskowitz, the rest of the analysts on TipRanks are bullish on MSFT stock. Microsoft sports a Strong Buy consensus rating based on 28 unanimous buy ratings.

Investors Buying the Dip

TipRanks’ stock investor tool shows that investors maintain a positive outlook on Microsoft stock and are buying the dip. Per the data, 5.0% of the investors holding portfolios on TipRanks have increased their stake in MSFT stock in the last 30 days. Moreover, about 1.5% of these investors have increased their holdings in the last seven days. 

Meanwhile, MSFT’s stock price forecast on TipRanks shows healthy upside potential. The average Microsoft price target of $374.28 indicates 24.8% upside potential to current levels.

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Read full Disclaimer Disclosure.

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