TLDR
- Citi cut its MSFT price target to $570 from $620, still implying 43% upside from current levels
- Wells Fargo trimmed to $625 and Mizuho to $490, but all three kept Buy ratings
- All three firms cite higher capital spending and questions around Azure growth as key concerns
- Microsoft is down roughly 16% year-to-date and sits below its 100-day and 200-day moving averages
- Wall Street consensus remains “Strong Buy” with a mean price target of ~$559, implying ~41% upside
Microsoft (MSFT) is heading into its fiscal Q4 earnings on July 29 with price target cuts from three major Wall Street firms, though none of them are walking away from their bullish stance.
Citi’s Tyler Radke cut his target to $570 from $620. Wells Fargo’s Michael Turrin trimmed to $625 from $650. Mizuho’s Gregg Moskowitz lowered his to $490 from $515. All three kept Buy ratings.
MSFT stock is currently down about 16% year-to-date and trades below both its 100-day and 200-day moving averages. It closed higher on Wednesday despite the target cuts.
The cuts are largely driven by multiple compression hitting the enterprise software sector in 2025. Radke’s revised target reflects a 25x multiple on estimated 2028 earnings.
The bigger concern across all three notes is capital spending. Microsoft is pouring money into AI infrastructure, and analysts want to see how that affects margins going forward.
Turrin at Wells Fargo called the Q4 setup “mixed.” He’s watching capital intensity and cloud market share closely, while still expecting Azure to post a modest beat thanks to new capacity and steady enterprise demand.
He raised long-term capex estimates and flagged rising costs per gigawatt as Microsoft scales its Vera Rubin data center cycle. Despite margin pressure and recent layoffs, he still sees double-digit EPS growth in fiscal 2027.
Azure and Copilot in Focus
Mizuho’s Moskowitz said Azure checks were “good” and even stronger than in March. He expects Azure to come in slightly above guidance and sees no red flags for the fiscal Q1 outlook.
He also noted early improvement in Copilot adoption and forecasts solid Intelligent Cloud revenue. On the consensus capex estimate of around $230 billion for fiscal 2027, he warned the number could still be too low given rising spend from AWS, Google, and Meta.
Citi’s Radke expects another modest Azure beat and stronger-than-usual Copilot net additions. He’s forecasting a fiscal Q1 Azure growth guide of 40–41%, helped by progress in data center buildouts.
Radke raised his Copilot estimates but trimmed gaming projections due to recent restructuring. He sees early benefits from E7 pricing and recent workforce reductions flowing through in fiscal 2027.
Seasonal Trends Add to the Case
Microsoft has a history of closing July with an average gain of 3.64%, followed by roughly 1% in August. That seasonal pattern adds a short-term layer to the bull case.
The company is expected to report $4.21 in EPS for the current quarter, up more than 15% year-over-year.
Wall Street’s overall consensus stands at “Strong Buy,” based on 34 Buys, one Hold, and one Sell. The average price target of $559.63 implies about 41% upside from current levels.
Earnings are scheduled for July 29.
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