Citi Raises Microsoft (MSFT) Price Target to $540 on Strong Q3 and AI Momentum

Citi recently raised the price target on Microsoft Corporation (NASDAQ:MSFT) to $540 from $480 and kept a Buy rating on the shares. Microsoft is a technology company. Citi updated Microsoft’s model following reports this week of a 3% workforce reduction and post the company’s strong fiscal Q3 results.

Management commentary has remained confident on the demand environment and investment cycle, the analyst told investors in a research note. This gives Citi confidence to raise the Azure growth trajectory back to 35% year-over-year in Q4.

Citi estimates the latest workforce reduction can help generate incremental net savings upwards of $1 billion into fiscal 2026 to help offset the incremental depreciation and spending.

A development team working together to create the next version of Windows.

Latest reports indicate that Microsoft -backed AI startups G42 and Mistral AI are collaborating to co-develop next-generation AI platforms and infrastructure. United Arab Emirates, or UAE-based G42 and French firm Mistral said the announcement, held on the margins of Choose France, aligns with the broader AI goals.

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