Truist Securities has reiterated a Buy rating on Microsoft Corporation (NASDAQ:MSFT), preserving a price target of $675.00. The firm cites persistent strength in commercial demand as the primary rationale for the recommendation, even as investors scrutinize Azure growth rates and the company’s elevated capital expenditure levels.
According to InvestingPro data referenced by Truist, Microsoft was trading at a price of $481.63 at the time the firm set its target, which Truist frames as implying roughly a 40% upside to its $675 target. InvestingPro also shows Microsoft trading at a price-to-earnings ratio of 34.12, a metric Truist notes is consistent with the assessment that the company is trading at a high earnings multiple.
Truist highlighted the company’s second-quarter commercial performance as evidence of durable demand. Bookings rose by more than 230% year-over-year, the firm said, and commercial remaining performance obligation - or commercial RPO - reached $625 billion. Those metrics, Truist argues, demonstrate broad-based demand across Microsoft’s customer base and support the company’s revenue momentum.
The firm pointed to Microsoft’s trailing revenue of $293.81 billion, which represents a 15.59% increase over the last twelve months. Truist described Microsoft as a "top tier, long-term compounder" with multiple growth vectors, including Commercial Cloud, Microsoft 365 Copilot, AI platforms and agentic capabilities.
On Azure specifically, Truist acknowledged that growth remains supply-constrained. Management has reiterated that demand outstrips available capacity and that the limited capacity is being allocated across first-party AI products, research and development, and Azure itself. The firm emphasized that these allocation choices reflect how management is prioritizing resources amid strong demand.
Truist also assessed Microsoft’s underlying fundamentals as "strong beneath the surface," even as market participants reacted to the reported Azure growth rates and higher capital expenditures disclosed in the company’s recent quarterly results. InvestingPro’s analysis places Microsoft near its Fair Value and reports a PEG ratio of 2.11, which the platform interprets as indicative of a high P/E ratio relative to near-term earnings growth.
On the earnings front, Microsoft reported fiscal second-quarter 2026 results that exceeded analyst forecasts. The company posted earnings per share of $4.14, topping the consensus estimate of $3.93. Revenue for the quarter reached $81.3 billion, versus an expected $80.23 billion.
In related analyst activity, Raymond James reduced its price target for Microsoft to $580 from $600 but kept an Outperform rating in place. Raymond James noted that Azure’s growth and the company’s guidance were slightly below investor expectations, a factor reflected in the lowered target.
Investors and analysts looking for deeper, model-based context can consult Microsoft’s Pro Research Report on InvestingPro, one of more than 1,400 reports available on the platform. The InvestingPro data cited by Truist is used to underline valuation measures and comparative metrics referenced in the firm’s analysis.
What this means
- Truist’s reiteration of a Buy rating underscores confidence in Microsoft’s commercial demand and long-term growth avenues despite near-term headwinds.
- Key growth areas identified by the firm include Commercial Cloud offerings, Microsoft 365 Copilot, AI platforms and agentic capabilities, all of which underpin its long-term compounder thesis.
Market signals and valuation observations
- InvestingPro data places Microsoft at a P/E of 34.12 and a PEG of 2.11, metrics that the platform and Truist interpret as showing the company is trading at a relatively high earnings multiple compared with near-term growth expectations.
- Despite the high multiple, Truist’s $675 target implies a significant upside versus the cited market price of $481.63.