Truist joins the bullish camp on Microsoft: AI "hoe and shovel" is one of the best investment choices

According to the Zhitong Finance APP, after Microsoft (MSFT.US) announced its first-quarter results for the 2026 fiscal year, Truist Securities analyst Terry Tillman reiterated a "Buy" rating with a target price of $675. The firm believes Microsoft is one of the best "hoe and shovel" investment choices with financial flexibility. Truist is optimistic about the growth momentum of Microsoft's Azure cloud platform and commercial orders, noting that demand trends are accelerating across various end markets and product areas.

The "hoe and shovel" strategy does not involve directly investing in the final products of a particular industry but rather investing in companies that support the foundational technologies, tools, or services of that industry. The benefit of this approach is that investors can participate indirectly in an industry without bearing the risks associated with direct investment in final products.

It believes that Microsoft is "one of the most outstanding artificial intelligence companies with both growth potential and profitability" and has strong balance sheet flexibility. Therefore, it recommends that investors buy its stock during the current market downturn.

Truist stated: "Further thoughts on the first-quarter report for the 2026 fiscal year and communication with the company's management: After the announcement of the first-quarter results for the 2026 fiscal year and communication with the company's investor relations department, we provide more updated information on several themes, including accelerating demand growth, capital expenditures, collaboration with OpenAI, the model impact based on the latest agreements, and brief macro comments. We reiterate our Buy rating and suggest buying in the current slight downturn. Based on the trend of accelerating demand growth across various end markets and product areas, we are more confident in the sustained momentum of Azure and commercial bookings. We believe this is one of the best comprehensive growth and profitability choices in artificial intelligence, with significant balance sheet flexibility, which is our view."

Additionally, Morgan Stanley previously reiterated its "Overweight" rating on Microsoft and raised its target price from $625 to $650. Similarly, JP Morgan also reaffirmed its "Overweight" rating and slightly raised its target price from $565 to $575. Bank of America reiterated its "Preferred Stock" Buy rating with a target price of $640.

Meanwhile, Wedbush has also joined the bullish camp, believing that Microsoft will be the next company to join Nvidia's $5 trillion market cap club. Wedbush reiterated its "Outperform" rating and a target price of $625