Deutsche Bank: Microsoft’s AI investment concerns are overly priced in; Azure growth may reach 41%

Glonghui, July 21｜Deutsche Bank stated in its latest research report that market concerns about Microsoft's surging capital expenditures, AI return on investment, and OpenAI order concentration are significantly overstated. The current valuation is attractive, and the bank maintains a “Buy” rating with a $550 target price. Deutsche Bank expects Microsoft’s fourth fiscal quarter (corresponding to the second calendar quarter) revenue to be $87.4 billion, up 14.3% year-on-year; non-GAAP earnings per share to be $4.17. Azure's growth rate at constant exchange rates is expected to reach 40% to 41%. Ongoing enterprise cloud migration, AI computing power demand, and new data center capacity will continue to fuel growth. Microsoft 365 commercial cloud revenue is projected to grow by 15% to 16%, and Copilot paid seats may surpass 25 million by year-end.