UBS raised the firm’s price target on Microsoft (MSFT) to $525 from $500 and keeps a Buy rating on the shares. Given the new capacity will come on throughout the second half, it is more likely that the Azure acceleration is more back-end loaded, the analyst tells investors in a research note. While the CEO’s “AI winter” comment is “unsettling,” UBS is comfortable that Microsoft is at the highest quality end of the customer and workload spectrum and the firm is not seeing any clear evidence of over-build among the smaller GPU cloud providers. Microsoft sentiment is modestly improving but remains mixed, reflecting concerns about supply-related push-outs of the Azure acceleration, lack of conviction in the timing of capacity go-lives, weariness about elevated capex and uncertainty about how the OpenAI relationship will evolve, the firm adds.
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