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Investing.com -- Truist lifted its price target for Microsoft (NASDAQ:MSFT) shares to $675 from $650 on Monday, citing the company’s sustained momentum in cloud and artificial intelligence.
The analysts said they are “confident Microsoft can sustain strong momentum associated with cloud and AI secular growth drivers, while benefiting from a growth-enhancing halo effect across a multitude of MSFT’s individual infrastructure, data and app businesses.”
Truist told investors that it has also raised its fiscal 2026 and 2027 revenue, operating profit, and cash flow estimates, seeing “opportunities for solid upside to ours and street estimates.”
The firm projects that “sustained strong cloud growth at scale & growing AI demand capture can lead to at least low teens double-digit rev, profit & CF growth over an extended period, while consistently returning cash via divs/repurchases.”
On the cloud side, Truist believes Microsoft is positioned to benefit from “existing workloads migrating to Azure, digital native businesses scaling their business and benefits from growing number of AI workloads and use cases.”
The analysts highlighted what they called “revenue synergies and force multiplier effects” across Microsoft’s portfolio, pointing to Microsoft Fabric, Cosmos DB, PostgreSQL, AI Foundry, Microsoft 365 Copilot, GitHub Copilot, Defender and Purview.
The new $675 price target is based on a long-term discounted cash flow model that assumes an 11.4% revenue CAGR, a 35% terminal free cash flow margin and a 9.6% WACC.
Truist said “premium valuation is justified owing to the company’s picks and shovels status in the rapidly evolving AI landscape while sustaining strong commercial bookings, RPO, cloud and Azure growth rates.”