Woofun AI reports that Citigroup reduced Microsoft’s price target from $620 to $570, maintaining a buy rating. The bank attributes the cut to increased pressure on short-term free cash flow and profit margins driven by AI investments. While Microsoft remains a leader in AI software and cloud commercialization, the pace of Azure data center construction, GPU procurement, and infrastructure expansion is expected to suppress near-term cash flow expectations.

Citigroup asserts that Copilot, Azure AI services, and enterprise migration will sustain long-term revenue growth.

However, market sentiment has shifted from pricing in future AI revenue to demanding quicker profit realization from current expenditures. Mizuho and Wells Fargo have also lowered their targets while keeping positive ratings, noting that investors must digest high capital costs and reevaluate Azure growth expectations amidst the reshaping of traditional software businesses.