Citigroup raises Microsoft target price to $613 from $605

Citigroup raises Microsoft target price to $613 from $605

Citigroup has increased its price target for Microsoft (NASDAQ:MSFT) stock to $613.00 from $605.00, maintaining a Buy rating. The revised target reflects expectations of strong quarterly results and positive revisions, particularly in the company's Azure cloud services [1].

Microsoft's stock is currently trading near its 52-week high of $514.64, with a year-to-date return of 21.48%. The firm anticipates another strong quarter of positive revisions and upside to Q4+Q1 Azure numbers. Citi's reseller survey showed one of the strongest growth and quota attainment performances in over four years, highlighting the company's robust performance in the cloud computing sector [1].

Citi's fiscal year 2026 estimate for Azure growth remains approximately three percentage points above the broader market consensus. The new price target is based on 30 times fiscal year 2028 earnings per share discounted back, reflecting the firm's confidence in Microsoft's long-term prospects. Microsoft remains Citi's top pick in the sector due to its AI exposure, business model quality, and long-term pricing and margin power [1].

Recent analyst updates have also been positive for Microsoft. RBC Capital reiterated its Outperform rating, citing healthy cloud conditions and phased rollouts of its Copilot feature across enterprise clients. BofA Securities raised its price target to $585, reflecting confidence in Azure cloud services and potential revenue increases in the upcoming fourth-quarter results [1].

Microsoft's strong financial performance is underscored by recent quarterly results, with Azure reporting a 35% year-over-year increase in constant currency, surpassing analyst estimates. The company's Productivity and Business Processes segment, including Office 365 and Dynamics 365, has also shown resilience and growth, contributing significantly to Microsoft's recurring revenue streams [2].

Microsoft's strategic focus on AI has positioned it as a leader in the AI revolution. The company's partnership with OpenAI and integration of AI capabilities across its product portfolio are expected to drive substantial revenue growth. By calendar year 2026, Microsoft's AI business could generate $45 billion in revenue, representing a significant growth opportunity [2].

However, the company faces challenges, including increased competition in the cloud market and risks associated with monetizing AI investments. Microsoft's capital expenditure strategy, focusing on shorter-lived assets and strategic partnerships, aims to balance growth investments with financial performance. Despite these challenges, analysts generally maintain a positive outlook on Microsoft's stock, with many rating it as Outperform or Buy [2].

References:
[1] https://www.investing.com/news/analyst-ratings/citi-raises-microsoft-stock-price-target-to-613-on-strong-azure-growth-93CH-4145618
[2] https://ca.investing.com/news/-4106228