Citi expects a solid beat and raise from Microsoft (NASDAQ:MSFT) when it reports earnings next week. The firm lifted its price target for the tech giant to $470 from $432 per share, maintaining a Buy rating on the stock in a note Wednesday.
The bank believes Microsoft's "ramping" generative AI should keep growth accelerating for the company.
Citi's latest round of fieldwork (reseller survey, channel checks and its CIO survey) gives them "incremental confidence" heading into the MSFT earnings release with "resellers indicating high quota achievement levels on a broad-based strength (Azure commitments + Dynamics, etc)."
"We expect a solid beat and raise and believe improving IT budgets, partially driven by GenAI where MSFT is in a leadership position w/ multiple monetization vectors can drive a durable multi-year reacceleration in top/bottom line growth," said analysts.
MSFT remains the bank's preferred mega-cap name in software, while it sees the company benefitting from better Azure growth and a favorable foreign exchange and PC market.