In a note Wednesday, analysts at Jefferies told investors that they expect Microsoft's (NASDAQ:MSFT) F4Q guide to be "prudent." Microsoft will post its latest quarterly earnings on Thursday, April 25.
The investment firm, which has a Buy rating and $550 price target on MSFT, views "3Q expectations of 14% yoy cc growth (vs F2Q 16%) on a 3pt harder comp offset by 3+pts of ATVI benefit as achievable."
On the impact of artificial intelligence, analysts expect a gradual adoption to ramp-up starting in the second half of this year, with more material adoption and a revenue uplift in 2025.
"That said, we expect AI contribution to Azure growth to increase w/ our checks pointing to strong demand for Azure AI services & elevated workloads as more models go into production," wrote Jefferies.
"We will want to see signs supporting strong adoption of MSFT's Copilots and traction towards its $10B AI ARR goal, which we expect it to achieve in F4Q."
Overall, they continue to believe MSFT is the top AI winner, "poised to benefit from both infra & app angles opportunities."