03:18 PM EST, 01/30/2025 (MT Newswires) -- Microsoft ( MSFT ) reported a "mixed quarter" in fiscal Q2 at least on first glance, though artificial intelligence monetization appears to be moving beyond infrastructure, RBC Capital Markets said in a note Thursday.

Microsoft ( MSFT ) late Wednesday reported stronger-than-expected fiscal Q2 results as the technology giant said demand for artificial intelligence helped boost its performance.

Per-share earnings increased to $3.23 during the three months ended Dec. 31 from $2.93 a year earlier, higher than the GAAP consensus on FactSet for $3.12. Revenue rose 12% to $69.63 billion, exceeding Wall Street's $68.87 billion view.

RBC analysts said they were "encouraged to see AI monetization broadening to Copilots," which now accounts for over $2 billion in annual recurring revenue. However, the analysts also said Microsoft's ( MSFT ) "core Azure business (non-AI) was muted, and execution was troubled."

The firm said it expects an "upward revision path" for estimates after Microsoft ( MSFT ) issued fiscal Q3 revenue guidance that fell short of expectations. The company said in a presentation it expects Q3 revenue, that includes productivity and business processes, intelligent cloud and personal computing, between $67.7 billion and $68.7 billion, while analysts surveyed by FactSet expect $68.83 billion.

"We believe Microsoft's ( MSFT ) significant AI leadership is being underappreciated by investors," RBC Capital said.

RBC Capital maintained its outperform rating on the stock with a $500 price target.

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