Raymond James on Monday lowered its price target for Microsoft to $580.00 from $600.00 but left its Outperform rating intact following the company’s fiscal second-quarter 2026 earnings release. The firm’s adjustment follows its assessment of Microsoft’s cloud growth and the company’s stated allocation of resources to first-party applications and internal development.
In its note, Raymond James said Azure growth and Microsoft’s Azure guidance registered at about one percentage point below what investors were expecting, based on the firm’s conversations with market participants. That shortfall was characterized as modest, coming amid an otherwise robust revenue backdrop - Microsoft has recorded 15.59% revenue growth over the past twelve months.
The research house pointed to Microsoft’s strategic decision to devote capital and engineering effort to first-party services and applications - Copilots was specifically cited as an example - as a material factor limiting the potential upside to Azure’s theoretical maximum growth. Raymond James does not anticipate a meaningful change in that allocation philosophy, noting that Microsoft regards these investments as core to constructing its AI platform approach.
On a related point, Microsoft provided an approximate quantification of its exposure to OpenAI in terms of remaining performance obligations (RPO), which the company placed at roughly 45% of the relevant backlog. Raymond James flagged this disclosure as a potential clarifier on a recurring investor question. The firm also noted that non-AI components of Microsoft’s business grew at 28% year-over-year.
Alongside these analyst observations, Microsoft’s fiscal second-quarter 2026 financials showed an earnings-per-share result of $4.14, outpacing the consensus expectation of $3.93. Revenue for the quarter came in at $81.3 billion versus analysts’ forecasts of $80.23 billion. The company’s stock moved slightly higher in after-hours trading following the earnings report.
With a market capitalization reported at $3.58 trillion, Microsoft remains classified by InvestingPro Fair Value estimates as slightly undervalued, and analysts broadly retain a strong buy consensus, even as Raymond James trims its target. The firm’s note reflects a mix of durable operating performance and an adjusted view on near-term cloud growth given Microsoft’s strategic resource choices.
Sections:
- Financial results: EPS of $4.14 versus $3.93 expected; revenue $81.3 billion versus $80.23 billion expected.
- Analyst action: Raymond James lowers price target to $580 from $600; Outperform rating maintained.
- Cloud and AI dynamics: Azure growth about one percentage point below investor expectations; Microsoft allocates resources to first-party AI applications and internal R&D.
- OpenAI exposure: Microsoft reports approximately 45% OpenAI-related RPO exposure; non-AI components grew 28% year-over-year.