Raymond James analysts reaffirmed a Strong Buy rating on Microsoft (NASDAQ:MSFT), maintaining a price target of $480 ahead of the company's fiscal second-quarter 2025 earnings report scheduled for January 29. Microsoft's position as a leader in AI technology continues to bolster investor confidence, with the company viewed as a key driver of innovation in the tech industry.

Market sentiment remains optimistic, particularly as conversations around artificial intelligence dominate the sector. Microsoft's prominence in this space, coupled with its robust Azure cloud platform, positions it as a critical player in the evolving technology landscape. While questions about rising capital expenditures persist, particularly following intra-quarter commentary, the focus will largely be on Azure's growth trajectory.

Investors are looking for clear return-on-investment (ROI) evidence, such as measurable outcomes from tools like Copilot, although such insights may not be forthcoming this quarter.

The primary hurdle for Microsoft is guiding for an acceleration in Azure growth in the second half of fiscal 2025, a milestone the company appears well-positioned to achieve as supply constraints ease. With its AI capabilities and strong execution in cloud services, the analysts believe Microsoft is expected to maintain its momentum and reinforce its leadership in the tech sector.