- Microsoft (MSFT) stock edged higher in early trading Tuesday, even as RBC Capital Markets analyst Rishi Jaluria designated it a “Top Pick” with a $500 price target, implying a potential 33% upside.
- Jaluria highlights Microsoft’s underestimated GenAI innovation across infrastructure and applications, predicting Azure’s growth will rebound due to AI momentum, new capacity, and an “AI halo effect,” targeting a low teens CAGR from fiscal year 2025 to 2026.
- He sees Microsoft expanding into hyperautomation and growing its Office base, leveraging its leadership in enterprise software and Azure to drive future gains, viewing the recent dip as a buying opportunity.
Microsoft (MSFT) saw its stock edge up to $377.42 in early trading on Tuesday, a modest lift that comes amid a broader narrative of underperformance, with shares down nearly 11% year to date. Yet, RBC Capital Markets analyst Rishi Jaluria sees this dip as a golden window for investors, adding the software giant to his “Top Picks” list with a bullish outlook. In a note to clients, Jaluria argued that the market has yet to fully grasp the depth of Microsoft’s innovation in generative artificial intelligence (GenAI), which he views as a transformative force across both infrastructure and application layers. His confidence rests on Microsoft’s entrenched dominance in enterprise software and its Azure public cloud platform, positioning it to capitalize on AI-driven momentum in a way that could reignite growth.
Jaluria’s optimism hinges on several key drivers. He anticipates Azure’s growth will reaccelerate, fueled by expanding AI capabilities, increased capacity coming online, and what he calls the “AI halo effect”—a ripple of demand spurred by Microsoft’s advancements in this space. He projects a low teens percentage compound annual growth rate (CAGR) for Microsoft from fiscal year 2025 to fiscal year 2026, a steady trajectory that reflects the company’s ability to leverage its existing strengths. Beyond Azure, Jaluria sees Microsoft pushing into fresh territory like hyperautomation – a field where AI and process optimization converge to streamline business operations – further diversifying its revenue streams. Meanwhile, the ever-expanding installed base of Microsoft Office, a cornerstone of its ecosystem, continues to provide a stable foundation for sustained growth.
The analyst’s boldest statement is his $500 price target, implying a 32.5% upside from current levels, paired with an ‘Outperform’ rating that underscores his conviction. This call arrives as Microsoft navigates a complex landscape where AI is reshaping technology’s role in enterprise and beyond. Jaluria’s thesis suggests that the recent 11% decline is less a sign of weakness and more a mispricing of Microsoft’s potential, particularly as Azure’s AI momentum could outpace expectations. With its blend of legacy strength and forward-looking innovation, Microsoft appears poised to reclaim investor enthusiasm, turning a year of softness into a launching pad for significant gains.
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