Citi maintains Buy rating, $540 target on Microsoft stock

On Wednesday, Citi analysts reaffirmed their positive stance on Microsoft Corporation (NASDAQ:MSFT) shares, maintaining a Buy rating and a price target of $540.00. This aligns with the broader Wall Street sentiment, as InvestingPro data shows 25 analysts have recently revised their earnings estimates upward, with price targets ranging from $429 to $650. The endorsement comes following Microsoft’s Build conference, where the company made more than 50 announcements, signaling a steady advance towards its goal of creating an "open agentic web." Despite the numerous updates, Citi noted that none appeared to be immediate drivers of revenue growth.

The Build conference, a smaller gathering with roughly 2,500 attendees, showcased Microsoft’s commitment to fostering an open, collaborative ecosystem, particularly in the realm of artificial intelligence (AI). The company’s push includes the integration of various data sources and continued innovation for developers, with the introduction of Agentic DevSecOps being a highlight. This innovation focus has contributed to Microsoft’s impressive 14% revenue growth over the last twelve months, reaching $270 billion.

According to Citi’s analysis, over 230,000 organizations have utilized Copilot Studio to develop AI agents, and the user base for these agents has doubled over the past year. This growth underscores Microsoft’s ongoing leadership in the enterprise general AI (GenAI) space and its ability to monetize these advancements effectively.

The analysts expressed confidence that Microsoft’s performance exiting the March quarter (Mar-Q) is poised to exceed Wall Street’s expectations. The sustained momentum in the company’s enterprise GenAI initiatives is seen as a key factor that could drive the stock’s upside potential. Citi’s continued Buy rating reflects their optimism about Microsoft’s strategic direction and its implications for future financial performance. Trading at a P/E ratio of 35, Microsoft currently appears slightly overvalued according to InvestingPro Fair Value calculations, though its strong financial health score and robust profit margins of 69% suggest continued growth potential. For deeper insights into Microsoft’s valuation and growth prospects, including 15+ additional ProTips and comprehensive financial metrics, investors can access the full Pro Research Report on InvestingPro.

In other recent news, Proofpoint (NASDAQ:PFPT), Inc. has announced its intention to acquire Hornetsecurity Group for $1 billion. This acquisition, the largest in Proofpoint’s history, aims to bolster its security offerings for small and mid-sized businesses, with the transaction set to close in the second half of 2025. Hornetsecurity, known for its AI-driven security for Microsoft 365, reports over $160 million in annual recurring revenue and more than 20% year-over-year growth. In another development, Crusoe, a key supplier for OpenAI’s Texas data center, has secured $11.6 billion in funding to expand the facility significantly. This expansion is critical for OpenAI as it seeks to reduce its reliance on Microsoft for computing power.

Meanwhile, Microsoft Corporation has received positive attention from analysts. Raymond (NSE:RYMD) James maintained an Outperform rating with a price target of $490, highlighting Microsoft’s advancements in AI technology. Goldman Sachs raised its price target for Microsoft to $550, citing strong AI initiatives and a forecasted $300 billion-plus in Microsoft Cloud revenue by 2029. These developments underscore Microsoft’s strategic focus on AI and cloud services. Additionally, recent premarket trading saw a decline in stocks for companies like Tesla (NASDAQ:TSLA) and other tech giants, reflecting a decrease in risk appetite among investors.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.