Microsoft Realigns Reporting Structure to Reflect Cloud + AI Integration

Morgan Stanley has reaffirmed its 'Overweight' rating for Microsoft (MSFT.US) and set a target price of $600. In a recent research report, the firm highlighted Microsoft's comprehensive restructuring of its external reporting structure, effective FY27.

The new structure merges the three historical operating segments of Productivity & Business Processes, Intelligent Cloud, and More Personal Computing into two new segments: 'Agents and Infra' and 'Devices and Consumer'. This change is aimed at aligning with Microsoft's increasingly integrated internal management of Cloud + AI.

Morgan Stanley believes this adjustment to be primarily an accounting reclassification, which does not impact the underlying economics. The changes to Azure's definition are mechanical, and the firm maintains its view that Azure will accelerate in 1H27 relative to 2H26.