Oppenheimer raises Microsoft target ahead of earnings amid demand strength

Oppenheimer analyst Brian Schwartz raised his price target on Microsoft to $625 from $570 on Monday while maintaining an Outperform rating ahead of the company's fiscal first-quarter results.

The firm's research indicates strong enterprise demand is supporting continued momentum in Azure and Microsoft 365, with infrastructure availability rather than demand serving as the main constraint on Azure growth.

Schwartz projects total revenue of $90 billion, representing 16% year-over-year growth, and GAAP earnings per share of $4.69 for the quarter. The company is scheduled to report results on October 28 after the U.S. market close. Wall Street expects revenue of $90.75 billion and earnings of $4.72 per share.

The analyst's regression analysis points to 46% constant-currency revenue growth for Azure in the fiscal first quarter, though he notes buy-side expectations stand at 47% growth. For the second fiscal quarter, Azure growth guidance will likely remain consistent with the first quarter, with a positive outcome approaching 50%.

Microsoft has confirmed plans to double data-center capacity over two years, supporting growth potential as additional capacity comes online in the current and next fiscal year. The company also announced Maia 300 deployments starting in 2027, targeting 40% more tokens per megawatt than leading GPU-based systems.

Copilot is expanding beyond seat-based monetization following a recent product update that positions it as a broader enterprise execution platform with revenue tied to both users and workloads. Schwartz views this as a potential driver for Microsoft 365 Commercial Cloud growth in coming quarters.

The analyst highlighted fiscal 2027 capital expenditure requirements as a key risk to monitor.