Resilient Azure Helps Microsoft Drive Solid Results; Macro Drives Lower Outlook; FVE Cut to $310

Microsoft reported solid fiscal second-quarter 2023 results, including generally inline revenue and modest EPS upside after factoring in the $1.17 billion restructuring charge taken to reduce headcount and rationalize facilities. The outlook for March, however, was once again shy of our below-consensus estimates. Azure continues to decelerate but came in slightly better than guidance, while macro pressures seem to be steady or slightly worse. Bulls can highlight Microsoft’s good growth in remaining performance obligation and Azure, while bears can point to decelerating revenue growth and light guidance. We are lowering our fair value estimate for wide-moat Microsoft to $310 per share, from $320, and continue to view shares as attractive.