Microsoft (MSFT) reported "solid" fiscal Q3 results, with its cloud platform Azure posting growth above estimates, RBC Capital Markets said in a note emailed Thursday.

RBC highlighted Microsoft's profitability and revenue for the quarter that were also above consensus, indicating a "strong start" to H2.

Revenue contributions from Azure's AI Services also continued to increase in the quarter adding 16 points to growth, RBC said.

"All in, the quarter is a step in the right direction," analysts said in the note. "We believe Microsoft's significant AI leadership is being underappreciated by investors."

The investment firm raised its price target to $525 from $500, while keeping its outperform rating on the stock.

Shares of Microsoft were up about 9% in recent trading Thursday.

Price: 430.64, Change: +35.38, Percent Change: +8.95