Raymond James reiterated an Outperform rating and reaffirmed a $600.00 price target on Microsoft (NASDAQ:MSFT) in a research note issued ahead of the software giant’s fiscal second-quarter 2026 results due Wednesday, January 28, after market close. At the time of the note Microsoft was trading around $465.95, making the $600 price objective equivalent to roughly a 35% upside from that level.
The firm’s stance aligns with a broadly bullish analyst consensus on the $3.46 trillion company, even as some market indicators point to softer sentiment. InvestingPro data cited by the firm shows Microsoft trading at a price-to-earnings ratio of 33.24, a level Raymond James characterizes as high relative to the company’s near-term earnings trajectory.
Raymond James notes a decline in investor sentiment for Microsoft shares, a trend that has tracked declines across many of the large-cap technology names often grouped as the "Magnificent 7," though the firm distinguishes Alphabet as an exception to that pattern. That shift in sentiment has occurred despite Microsoft reporting revenue growth of 15.59% over the past twelve months, bringing trailing revenues to $293.81 billion.
On the operations side, Raymond James reports that market checks show Azure cloud services continuing to perform well. The firm highlights that non-AI workloads remain a primary driver for Azure while AI-related capacity is constrained by limited supply. These dynamics leave Azure growth intact but with some supply limitations on AI workloads.
One of the key concerns raised in the note centers on memory availability and pricing. Raymond James says those dynamics have prompted worries that Microsoft’s internal target for reaching supply/demand equilibrium - currently set for the end of fiscal year 2026 - could slip further out. Nevertheless, the firm qualifies that it would be premature to expect Microsoft to announce such a delay on the upcoming earnings call.
The research commentary also breaks Microsoft’s business into segments. Raymond James points to pressure in the Productivity and Business Processes segment, where concerns about the defensibility of Microsoft 365 in the face of emerging AI competitors have weighed on expectations. By contrast, the More Personal Computing division looks positioned for a solid quarter, according to the firm’s checks.
Raymond James therefore maintains a positive stance on Microsoft heading into the earnings release, holding both its Outperform rating and $600 price target.
Additional context from InvestingPro included in the note highlights that Microsoft has increased its dividend for 20 consecutive years and currently yields 0.78%. InvestingPro’s comprehensive scoring system assigns Microsoft a financial health rating of "GOOD," with particular strength in profitability metrics. The InvestingPro service also covers Microsoft among more than 1,400 U.S. equities for users seeking deeper research on individual names.
The note arrives alongside several other recent analyst moves and corporate updates that may influence investor views. Stifel has trimmed its price target on Microsoft to $520 while keeping a Buy rating, citing margin pressure even as it expects Azure to grow 39% on a constant-currency basis - a pace the firm says would exceed expectations by roughly 200 basis points. UBS lowered its price target to $600 amid a broader software sector de-rating but continues to recommend buying the stock. KeyBanc Capital Markets reiterated an Overweight rating with a $630 price target, citing increased enterprise demand for Azure as a potential tailwind.
On the corporate activity front, Microsoft has entered a sponsorship agreement with the Mercedes Formula One team, with Microsoft branding placed on the team’s new car. Financial terms were not disclosed, though estimates referenced in the research note suggest the sponsorship could be valued at about $60 million per year. Separately, OpenAI, led by CEO Sam Altman, announced plans to release several Codex-related products with a focus on cybersecurity applications - a development Raymond James notes as part of the broader AI ecosystem that intersects with Microsoft-related activity.
Investors watching the January 28 earnings release will likely weigh Azure momentum, memory supply trends, segment-level pressures for Productivity and Business Processes, and any commentary from management about timing for supply/demand normalization in memory markets. Raymond James’s reaffirmation of an Outperform rating and a $600 price target encapsulates the firm’s view that Microsoft retains upside potential while navigating near-term industry headwinds.