Microsoft: Shares Over $300 Again After Q3 FY23 Results, Now What?

Company Update (MSFT US) (Buy)

Highlights

• Q3 FY23 shows how MSFT is a winner from key tech trends

• Revenue grew by 15% and 19% in its two larger segments

• Cost growth has been sharply reduced and will stay low

• Guidance implies mid-teens EPS growth in Q4

• We see a 60% upside (16.2% p.a.) by June 2026. Buy

Introduction

Microsoft shares have risen above $300 again after Q3 FY23 results were released last Tuesday (April 25):

MSFT Share Price (Last 5 Years)

Source: Google Finance (01-May-23).

Microsoft has been a core holding for us since 2014, and we started releasing our research publicly with a Buy rating in December 2020. Since then, Microsoft shares have returned 39% (including dividends) in less than 2.5 years, with the share price rising by nearly 28% so far in 2023 alone.

Microsoft is a winner from key technological trends including AI. Q3 FY23 results show that its multi-year structural growth is continuing. Productivity & Business Processes and Intelligent Cloud both grew revenues by double-digits, though lower-margin More …