Citi Just Slashed Its Price Target on Microsoft Stock Ahead of Earnings. Here's Why.

Microsoft (MSFT) stock ended higher on Wednesday even though Citi analysts led by Tyler Radke trimmed their price target on the tech behemoth. In his research note, Radke announced a downwardly revised $570 price target on MSFT, which still represents a 43% upside from current levels. 

His bullish call brings much-needed reprieve to Microsoft shares that are currently down roughly 16% versus the start of this year.

Why Citi Lowered Price Target on Microsoft Stock

Radke reduced his price objective on MSFT stock primarily because of multiple compression that’s hitting the enterprise software sector in 2026. 

His downward revision translates to a 25x multiple on the giant’s estimated 2028 earnings. 

According to Radke, investors are cautious about capital expenditures heading into Microsoft’s fourth-quarter earnings release scheduled for July 29. 

They “will need to digest higher capex intensity and conservative FY27 operating margin outlook” as Microsoft invests rather aggressively in its artificial intelligence (AI) infrastructure, he added.  

Note that MSFT currently sits below its 100-day and 200-day moving averages (MAs), indicating the longer-term trend remains downward. 

Why Citi Still Sees Significant Upside in MSFT Shares

While Radke trimmed his price target, he remains bullish on Microsoft shares for the longer term.

“We remain positive on MSFT with positive checks particularly on CoPilot, and view the company as strategically positioned in an era of optimizing token spend and AI efficiency,” he told clients. 

Note that the Nasdaq-listed firm is expected to record $4.21 in earnings per share (EPS) for its current financial quarter, up more than 15% year-over-year. 

Microsoft also has a history of closing July with a 3.64% gain, followed by another 1% surge in August, a seasonal trend that significantly improves its near-term appeal. 

What’s the Consensus Rating on Microsoft?

Importantly, Citi isn’t the only Wall Street firm that’s keeping bullish on MSFT shares for the next 12 months. 

According to Barchart, the consensus rating on Microsoft is currently set at “Strong Buy,” with the analysts’ mean price target of about $548 indicating potential upside of a little under 40% from current levels.