Microsoft and Amazon both posted blistering quarterly earnings, and Wall Street has grown more bullish on each stock as a result. Microsoft's Azure cloud unit topped $100 billion in quarterly revenue for the first time, while Amazon's AWS division posted its fastest growth in 18 quarters.
Microsoft's Azure cloud division surpassed $100 billion in quarterly revenue for the first time, up 43% year over year. Amazon's cloud unit, AWS, posted $42.2 billion in revenue, beating analyst estimates by nearly $1.7 billion. Both companies reported the results after a tough year for their stocks, and Wall Street has turned more bullish on each following the earnings.
Microsoft's Copilot momentum builds
Investors had been bearish on Microsoft over concerns that its AI assistant, Copilot, wasn't gaining enough traction and that Microsoft 365 could lose competitive ground as AI reshapes software. But paid Copilot subscribers rose by 10 million in the quarter to reach 30 million total, double the net additions of the prior quarter.
Of the 35 Wall Street analysts covering Microsoft, 34 have buy ratings and one recommends a hold, with an average price target implying nearly 21% upside, according to TipRanks. Goldman Sachs analyst Gabriela Borges maintained her buy rating and raised her price target by $30 to $640, calling the quarter an inflection point that addressed investor concerns.
AWS delivers its fastest growth in 18 quarters
Amazon's cloud business also stole the show in the quarter. AWS revenue grew 37% year over year, its strongest growth in 18 quarters. The company also hiked its full-year capital expenditure projection to $220 billion, largely because of surging memory costs.
CEO Andy Jassy doesn't see AWS slowing down anytime soon. According to the earnings call: "we will still not have enough capacity to meet all the demand we have", he said, adding that demand for 2028 is already striking.
Analysts are similarly bullish on Amazon: of 38 covering the stock, 37 have buy ratings and one has a hold, with an average price target implying roughly 23% upside. Benchmark analyst Daniel Kurnos raised his price target by $30 to $400, implying about a 40% gain from recent levels, and estimates the stock trades at about 10 times operating income before depreciation and amortization.
Source: Motley Fool
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