Analysts at Piper Sandler told investors in a note Monday not to sleep on a non-cloud recovery for Microsoft (NASDAQ:MSFT) in December.
They explained that Overweight-rated Microsoft shares have been rangebound between $312 and $330 after the sell-off following the July earnings call "in part because investors have been digesting heavy spending intentions on AI infrastructure ahead of new product releases."
"For example, purchase commitments rose by $22B y/y, disclosed in the 10-K filing. That said, we see the potential for MSFT to guide to a slight improvement in core growth driven by a non-cloud (47% of sales) recovery in the December quarter even assuming little to no improvement in Microsoft Cloud (53% of sales) facing optimization headwinds," the analysts explained.
The analysts at Piper Sandler added that their firm's bullish view that MSFT is well-poised to capitalize on its AI first-mover advantage was reinforced by the additional Copilot feedback from the Envision London event on 10/18.
As a result, they "recommend large-cap growth investors add to MSFT positions ahead of the M365 Copilot GA release on November 1st, marking the next stage of a promising AI journey."