Analysts Reaffirm Bullish View on Microsoft

March 21, 2026 at 19:11 UTC

3 min read

Key Points

RBC Capital and Jefferies recently reiterated positive ratings on Microsoft (MSFT)
Jefferies raised its Microsoft (MSFT) price target to $675 after meetings with IR
Microsoft’s (MSFT) Azure and M365 integration underpins its AI growth strategy
Azure revenue grew 39% year over year, driving Microsoft’s 17% revenue gain

Wall Street Reaffirms Optimism on Microsoft

Recent analyst commentary highlights continued optimism around Microsoft Corporation. On March 11, RBC Capital reiterated its Outperform rating on Microsoft with a price target of $640. Earlier, on March 5, Jefferies reiterated its Buy rating and set a higher price target of $675 after meeting with the company’s head of investor relations.

Microsoft is described as one of the best artificial intelligence stocks to own over the next decade. The company specializes in AI-powered cloud, productivity, and business solutions, and develops and markets software, services, and hardware.

AI Platform Strategy and Model-Agnostic Approach

Jefferies emphasized Microsoft’s end-to-end platform that combines Azure and Microsoft 365. This platform is designed to bring together enterprise AI spending and is supported by an extensive distribution network that already serves more than 450 million paid Microsoft 365 users.

The firm noted that AI is expanding the total addressable market for Microsoft 365 and highlighted that AI-related margins are improving faster than cloud margins did at a similar stage in their development. According to Jefferies, Microsoft can monetize its infrastructure regardless of which AI model or agent ultimately leads the market.

Jefferies described Microsoft’s strategy as model-agnostic, focusing on controlling the platform on which AI models are deployed, governed, and monetized. Its full-stack AI solution, including governance, was cited as attractive to chief information officers.

Valuation and Earnings Perspective

From a valuation standpoint, Jefferies pointed out that Microsoft is trading at about 21 times its expected earnings per share for fiscal year 2027. This multiple is below the company’s 10-year average of 23.5 times, suggesting a discount relative to its historical earnings valuation.

Separately, investor-focused commentary characterized Microsoft’s stock as having fallen roughly 25% from prior levels, describing it as trading at levels rarely seen over the past decade when measured on an operating price-to-earnings basis.

Business Performance and Azure Growth

Microsoft’s diversified business spans a gaming division with consumer hardware, business productivity software, cloud computing, and a large investment in OpenAI, the developer of ChatGPT. The company’s biggest exposure to the AI trend is through its Azure cloud computing platform.

Azure has become a key option for building and running AI models, supported by Microsoft’s neutral stance of not pushing a single model. Developers are able to choose from numerous generative AI models on Azure, which has contributed to strong demand for the service.

In Microsoft’s most recent reported quarter, Azure was its fastest-growing segment, with revenue increasing 39% year over year. Overall company revenue rose 17% in the same period, performance that is typically associated with premium valuation levels.

Market Context and Investor Sentiment

Despite this growth, commentary noted that Microsoft’s stock "has fallen from grace" compared with recent highs and is now viewed by some market observers as unusually inexpensive given its operating earnings.

Past performance was cited to illustrate this view: at the start of 2023, when Microsoft’s valuation was at a similar level on this metric, the stock subsequently gained more than 50% over that year. Current commentary argues that Microsoft remains central to global AI deployment and that there are no indications of a slowdown in this area.

Key Takeaways

Analysts at RBC Capital and Jefferies maintain bullish stances on Microsoft, underscoring confidence in its AI-driven growth strategy and integrated cloud-productivity platform.
Jefferies views Microsoft’s model-agnostic, full-stack AI infrastructure as a key competitive strength that can generate returns regardless of which specific AI models dominate.
Robust growth in Azure and overall revenue contrasts with a valuation that some observers consider below Microsoft’s historical earnings multiples, shaping the current investment debate.