09:11 AM EDT, 10/28/2024 (MT Newswires) -- Microsoft ( MSFT ) is anticipated to exceed expectations for key enterprise categories when it releases its latest quarterly results this week, amid cloud and artificial intelligence momentum, Truist Securities said in a Monday client note.

Truist believes the technology giant is set to outperform across cloud, AI services and the adoption of its Copilot generative AI chatbot, based on the brokerage's conversations with customers, partners and resellers, as well as survey work with enterprise IT buyers. Microsoft ( MSFT ) is scheduled to release its first-quarter results for fiscal 2025 after the markets close Wednesday.

"We believe management remains conservative with guidance despite the upside to expectations the last few quarters as AI inferencing ramps up and enterprises put major incremental optimizations in the rearview mirror," according to Truist.

The brokerage anticipates Microsoft's ( MSFT ) financial results to show sustained momentum in its cloud computing platform, Azure. Truist's conversations with enterprise buyers suggested that the platform "continues to win workloads" for generative AI applications, while Microsoft's ( MSFT ) partnership with OpenAI "continues to be a driver" for the company despite media reports about a potential change in the partnership structure between the two entities.

Momentum for the company's Copilot offering across its product portfolio "remains strong," Truist said. "Despite early adoption metrics, we believe that there is skepticism in the investment community about the strength of the Copilot value to customers and the contribution to the model," the brokerage added. Truist believes the company can generate investor confidence by sharing metrics around the financial contribution of Copilot during its earnings call.

Across the Office 365 suite, the brokerage expects average revenue per unit to be the main upside driver to Microsoft ( MSFT ) management's growth expectations, buoyed by persistent E5 strength and the gradual adoption of the 365 Copilot.

Truist also expects continued momentum in the company's "comprehensive" cybersecurity portfolio. "One of the key advantages of Microsoft ( MSFT ) is its bundling strategy, making it a very compelling value proposition for customers," the brokerage said.

Truist has a buy rating on Microsoft's ( MSFT ) stock with a price target of $600.

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