Bank of America revises Microsoft outlook after earnings update
Microsoft (MSFT) is a global software giant best known for its Windows operating system and Office productivity suite. It is also a major hyperscaler in cloud computing, and its stock performance is increasingly driven by artificial intelligence developments.
The company operates through three main business segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Its cloud platform is Azure, while its flagship AI product is Microsoft 365 Copilot, News.Az reports, citing foreign media.
At the time of writing on Thursday afternoon, April 30, the stock is down approximately 16% year to date, according to Yahoo Finance. In contrast, the SPDR S&P 500 Index (SPY) has gained slightly more than 5% over the same period.
Microsoft shares are also under pressure following the company’s fiscal Q3 earnings report released on April 29, with the stock trading about 4.6% lower near $405.
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Market commentary suggests the main factor weighing on the stock is elevated capital expenditures (capex), which are affecting free cash flow.
In related developments, Microsoft has revised its partnership structure with OpenAI, no longer holding an exclusive license for its models. The move follows Microsoft’s absence from OpenAI’s latest founding round.
The company has also made leadership adjustments aimed at strengthening its AI strategy, including the appointment of Jacob Andreou as Executive Vice President for Copilot. Additionally, Microsoft launched “Copilot Cowork” in March as part of its Frontier early access program.
From the earnings report, Microsoft’s Q3 revenue rose 18% year over year (up 15% in constant currency) to $82.9 billion. During the earnings call, CEO Satya Nadella highlighted the company’s continued momentum in artificial intelligence.
Overall, Bank of America has adjusted its outlook on Microsoft following the earnings release, reflecting the market’s focus on AI-driven growth, capital spending trends, and evolving competitive dynamics in the cloud and AI ecosystem.
By Nijat Babayev
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