Morgan Stanley Reaffirms Microsoft Buy Rating, Adjusts Business Structure

Morgan Stanley's research report states that Microsoft has announced a comprehensive adjustment to its external reporting structure for the fiscal year 2027. The company will merge its three segments—Productivity and Business Processes, Intelligent Cloud, and Personal Computing—into two new segments: "Intelligent Agents and Infrastructure" and "Devices and Consumer," to adapt to the integrated management approach of cloud and AI. The firm believes that this adjustment is an accounting reclassification that does not affect the underlying economics. The changes in the metrics for Azure and Microsoft 365 are merely mechanical adjustments, and the judgment that Azure will accelerate in the first half of 2027 relative to the second half of 2026, and that Microsoft 365 commercial cloud growth will accelerate in fiscal year 2027, remains unchanged. Additionally, Morgan Stanley reaffirms its "Buy" rating on Microsoft with a target price of $600.

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