12:41 PM EDT, 10/31/2024 (MT Newswires) -- Microsoft's ( MSFT ) key artificial intelligence offerings are "tracking well" and the company remains "well-positioned as a leader in AI across both applications and infrastructure," BofA Securities said in a note Thursday.

The company's fiscal Q2 outlook for its Azure and Office segments is "disappointing," but solid large deal activity for Azure in Q1 indicates healthy demand while the Office outlook is "factoring in a healthy degree of conservatism" as subscriber growth stabilizes, the brokerage firm said in the note.

"The Q2 outlook for 31.5% growth (for Azure) is below our 32% estimate, with the delta coming from delayed GPU/CPU shipments," BofA said. For the Office segment, Microsoft's ( MSFT ) Q2 guidance of 14% year-over-year growth is below BofA's 15% estimate.

Given the weak Q2 outlook, the firm cut its fiscal 2025 estimates for Microsoft ( MSFT ), with earnings per share now expected at $12.65, from its prior forecast of $13.01, and revenue now expected at $275.86 billion, down from its prior estimate of $277.14 billion.

BofA said, however, that it remained confident for an H2 reacceleration and maintained its buy rating on the stock and price target of $510.

Microsoft ( MSFT ) shares were down more than 5% in recent trading.

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