Citi raises Microsoft price target after strong earnings report

On May 15, 2025, Microsoft, a leading technology company based in the United States, reported strong fiscal earnings and revenue that exceeded analyst expectations. The bank Citigroup, expressing increased optimism about Microsoft's future, raised its price target for the company's stock from $480 to $540 per share. This change indicates a projected upside of 19% from the previous day's closing value. In parallel, Microsoft's stock has already gained approximately 7% since the beginning of the year. Analyst Tyler Radke noted that the positive earnings report was also accompanied by a strategic decision to lay off around 6,000 employees, which represents about 3% of their workforce. Radke regarded this measure as a prudent move aimed at enhancing operational efficiency, estimating that these layoffs could potentially lead to over $1 billion in net savings by Fiscal Year 2026. These savings are expected to be partially reinvested into research and development, particularly towards initiatives in Microsoft's AI portfolio. Furthermore, Radke mentioned that the heightened earnings and tariff de-escalation align with a resurgence in projected growth for Microsoft, particularly within its Azure cloud business, which is now anticipated to return to a growth trajectory exceeding 30% through Fiscal Year 2026. With resilience demonstrated in Q3 results, Microsoft appears well-positioned to navigate market volatility, further solidifying its leadership role in the enterprise AI sector. Overall, the response from analysts has been predominantly positive, with a majority rating Microsoft a buy or strong buy. Data from LSEG indicates that 56 out of 63 analysts covering the company have expressed bullish sentiment, with an average analyst price target suggesting an 11% upside potential for the stock in the near future. These developments underscore Microsoft's robust market position and confidence from financial advisers amid a changing economic landscape.