Deutsche Bank: Concerns about Microsoft's AI investment have been overly reflected; Azure's growth rate may reach 41%

Deutsche Bank stated in its latest research report that the market's concerns about Microsoft's surge in capital expenditure, AI investment returns, and the concentration of Open AI orders have been significantly overstated. The current valuation is attractive, maintaining a "Buy" rating and a target price of $550. Deutsche Bank expects Microsoft's fourth fiscal quarter (corresponding to the second quarter of the calendar year) revenue to be $87.4 billion, a year-on-year increase of 14.3%; non-GAAP earnings per share are expected to be $4.17. The growth rate of Azure, calculated at constant exchange rates, is expected to reach 40% to 41%, with enterprise cloud migration, AI computing demand, and new data center capacity continuing to support growth. Microsoft 365 commercial cloud revenue is expected to grow by 15% to 16%, and paid seats for Copilot may exceed 25 million by the end of the year.