Shares of tech giant Microsoft (MSFT) had a rough first quarter after falling 12%, but RBC Capital Markets analyst Rishi Jaluria sees the dip as a buying opportunity. In fact, he added Microsoft to his “Top Picks” list and noted that investors may be underestimating the company’s strength in generative AI. Jaluria believes that Microsoft’s Azure cloud business could accelerate again, thanks to AI demand and a strong reputation as a leader in enterprise software and cloud infrastructure.
In addition, Jaluria expects Microsoft to grow steadily through Fiscal Year 2026, especially since it has plans to enter new areas of growth like hyperautomation while also continuing to expand its Office software users. As a result, the analyst set a $500 price target, which is about 31% higher than the current level, and gave it an Outperform rating.
It is worth noting that some of Microsoft’s recent struggles were caused by investor fears over tariffs, as well as a possible slowdown in AI spending and slightly weaker cloud revenue. Indeed, sales from its Commercial Cloud and Azure segments came in just below Wall Street’s forecasts. Interestingly, though, AMD (AMD) CEO Lisa Su recently said that the demand for computing power remains very strong, which suggests that concerns about slower AI growth may be overblown. Nevertheless, investors will get a better idea when Microsoft reports earnings in late April.
Is MSFT Stock a Buy?
Overall, Microsoft stock has a Strong Buy consensus rating among 35 Wall Street analysts. That rating is based on 32 Buys and three Holds assigned in the last three months. Furthermore, the average MSFT price target of $510.03 per share implies 34% upside potential.
