Erste Group Bank Increases Earnings Estimates for Microsoft

Key Points

• Erste Group Bank raised Microsoft’s FY2027 EPS estimate to $19.60 from $19.58, broadly in line with the $19.65 consensus forecast.
• Analyst sentiment remains positive: 42 of 48 covering analysts rate Microsoft a Buy, contributing to a “Moderate Buy” consensus and an average price target of $579.84.
• Microsoft reported quarterly EPS of $4.74 and revenue of $90.01 billion, beating expectations, while raising its quarterly dividend to $0.98 per share. Investors are also watching AI spending, valuation, regulatory concerns and the planned 2027 rollout of its Maia 300 AI chip.

Microsoft Corporation (NASDAQ:MSFT - Free Report) - Erste Group Bank lifted their FY2027 earnings per share estimates for Microsoft in a report released on Thursday, October 8th. Erste Group Bank analyst H. Engel now expects that the software giant will post earnings of $19.60 per share for the year, up from their previous estimate of $19.58. The consensus estimate for Microsoft's current full-year earnings is $19.65 per share.

Several other research firms also recently weighed in on MSFT. Piper Sandler raised their price target on shares of Microsoft from $550.00 to $610.00 and gave the stock an "overweight" rating in a research note on Wednesday, September 30th. Citigroup raised shares of Microsoft from a "market outperform" rating to a "buy" rating in a research note on Monday, October 5th. Bank of America increased their price objective on shares of Microsoft from $500.00 to $600.00 and gave the company a "buy" rating in a report on Tuesday, September 1st. Rothschild & Co Redburn set a $440.00 price objective on shares of Microsoft in a report on Monday, September 21st. Finally, DA Davidson reissued a "buy" rating and issued a $550.00 target price on shares of Microsoft in a research note on Thursday, July 30th. Forty-two equities research analysts have rated the stock with a Buy rating, four have issued a Hold rating and two have given a Sell rating to the company's stock. According to data from MarketBeat, Microsoft presently has an average rating of "Moderate Buy" and an average price target of $579.84.

Microsoft Price Performance

Microsoft stock opened at $541.15 on Tuesday. The company has a fifty day simple moving average of $502.22 and a 200-day simple moving average of $436.28. The firm has a market capitalization of $4.02 trillion, a price-to-earnings ratio of 30.13, a PEG ratio of 1.72 and a beta of 1.10. The company has a quick ratio of 1.22, a current ratio of 1.23 and a debt-to-equity ratio of 0.07. Microsoft has a 52-week low of $349.20 and a 52-week high of $553.72.

Microsoft (NASDAQ:MSFT - Get Free Report) last announced its quarterly earnings data on Wednesday, July 29th. The software giant reported $4.74 earnings per share for the quarter, beating analysts' consensus estimates of $4.24 by $0.50. Microsoft had a return on equity of 31.98% and a net margin of 40.31%. The company had revenue of $90.01 billion for the quarter, compared to analyst estimates of $87.62 billion. During the same quarter last year, the firm posted $3.65 EPS. The firm's revenue for the quarter was up 17.7% on a year-over-year basis.

Microsoft Increases Dividend

The company also recently declared a quarterly dividend, which will be paid on Thursday, December 10th. Stockholders of record on Thursday, November 19th will be given a dividend of $0.98 per share. This represents a $3.92 annualized dividend and a dividend yield of 0.7%. The ex-dividend date of this dividend is Thursday, November 19th. This is a positive change from Microsoft's previous quarterly dividend of $0.91. Microsoft's dividend payout ratio is presently 20.27%.

Insider Activity

In other Microsoft news, EVP Amy Hood sold 41,674 shares of Microsoft stock in a transaction dated Monday, September 14th. The shares were sold at an average price of $498.27, for a total transaction of $20,764,903.98. Following the transaction, the executive vice president directly owned 533,624 shares of the company's stock, valued at $265,888,830.48. The trade was a 7.24% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Satya Nadella sold 86,525 shares of the business's stock in a transaction dated Tuesday, September 1st. The shares were sold at an average price of $501.46, for a total transaction of $43,388,826.50. Following the completion of the transaction, the chief executive officer owned 486,763 shares in the company, valued at $244,092,173.98. The trade was a 15.09% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders sold 143,009 shares of company stock worth $71,420,699. Company insiders own 0.03% of the company's stock.

Institutional Trading of Microsoft

A number of hedge funds and other institutional investors have recently made changes to their positions in MSFT. Montgomery Financial Services LLC acquired a new stake in Microsoft in the second quarter worth about $26,000. Frankly Finances LLC bought a new stake in Microsoft during the 2nd quarter worth about $35,000. Bard Associates Inc. acquired a new position in Microsoft during the 2nd quarter valued at about $37,000. PMV Capital Advisers LLC acquired a new position in Microsoft during the 2nd quarter valued at about $38,000. Finally, Fiduciary Advisors Inc. lifted its position in Microsoft by 37.4% during the 2nd quarter. Fiduciary Advisors Inc. now owns 125 shares of the software giant's stock valued at $47,000 after purchasing an additional 34 shares during the period. Institutional investors and hedge funds own 71.13% of the company's stock.

Microsoft News Roundup

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Microsoft unveiled its third-generation Maia 300 AI chip, scheduled for production deployment in 2027. The company expects multi-gigawatt deployments and says the system could deliver approximately 40% more AI-generated tokens per megawatt or dollar than leading GPU-based systems, potentially lowering Azure’s computing costs and improving margins. Microsoft to rely more on homegrown AI chips, reducing dependence on Nvidia
• Positive Sentiment: The Maia announcement reinforces Microsoft’s broader AI growth narrative. Management has described the initiative as its “biggest bet yet” on in-house silicon, with the potential to reduce dependence on Nvidia and AMD while supporting continued Azure and Copilot expansion. Microsoft Unveils Maia 300 AI Chip, Plans Up to One Million Next Year
• Positive Sentiment: Microsoft’s AI chief said Azure will continue using chips from Nvidia, AMD and Intel alongside Maia, suggesting the custom-chip push is intended to diversify supply and improve efficiency rather than immediately eliminate external suppliers. Microsoft’s AI chief discusses Maia 300
• Neutral Sentiment: The launch pressured Nvidia and shook the semiconductor sector, highlighting that major cloud providers are increasingly developing their own AI hardware. However, Microsoft’s Maia rollout is not expected to begin at scale until 2027, leaving execution, manufacturing and performance risks.
• Negative Sentiment: Microsoft faces regulatory and workforce-related risks after its suspension from the U.S. PERM green-card program amid scrutiny of its H-1B visa practices. The issue could complicate hiring of specialized technical workers. Satya Nadella went from H-1B worker to Microsoft CEO
• Negative Sentiment: Investors remain sensitive to Microsoft’s substantial AI capital spending and elevated valuation. Analyst downgrades across some AI software stocks and concerns about AI-related market concentration could limit further upside unless Azure growth exceeds expectations.

About Microsoft

Microsoft Corporation is a global technology company that develops software, cloud services, devices, gaming products and business solutions. Founded in 1975 by Bill Gates and Paul Allen, the company is best known for the Windows operating system and Microsoft Office productivity software. Microsoft is headquartered in Redmond, Washington, and serves consumers, businesses, governments and educational institutions worldwide.

Microsoft's productivity and business offerings include Microsoft 365 applications such as Word, Excel, PowerPoint and Outlook, along with collaboration tools including Teams.

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