Microsoft stock has struggled this year and Citi Research lowered its price target on the stock on Wednesday.
The firm, however, remains "positive" on Magnificent Seven stock as the company is well-positioned in the artificial-intelligence moment.
Citi Research analyst Tyler Radke on Wednesday lowered his price target on Microsoft to $570 from $620 but maintained a Buy rating. That represents 48% upside from Tuesday's closing price of $384.93.
Shares advanced 3% to $396.67 on Wednesday. Microsoft has struggled in 2026, falling 18%, and is down 22% over the past 12 months.
But Radke is optimistic. "We remain positive on MSFT," he wrote Wednesday, adding that the company is "increasingly strategically positioned in an era of optimizing token spend and AI efficiency."
The firm expects a strong fourth-quarter earnings report but said investors should brace themselves for intensifying AI spending in fiscal 2027.
"We think MSFT will be able to demonstrate stronger returns with accelerating growth rates in flagship franchises (Azure + M365 CoPilot) as we move into FY27, which would ultimately drive accelerating overall revenue/EPS growth through FY30," Radke wrote.
Azure is Microsoft's cloud-computing platform, while CoPilot is the company's AI-power assistant tool.
Separately, Evercore ISI analysts led by Kirk Materne raised their Microsoft price target to $525 from $510 on Wednesday.
The firm is "trying to find the sweet spot of accelerating AI revenue" and "normalizing" capital spending growth, he said.
Materne added that Microsoft will continue to be aggressive with AI spending moving forward, and he doesn't believe the fourth-quarter earnings report will help investors work out how the company is balancing free cash flow with capital expenditures.
"In our view, sentiment is overly apathetic at current levels, and we see an attractive catalyst path for MSFT," he wrote.
Write to Kit Norton at kit.norton@barrons.com
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(END) Dow Jones Newswires
July 15, 2026 15:19 ET (19:19 GMT)
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