Citigroup and other investment banks have lowered Microsoft's price target, with AI spending pressure as the focus.

BlockBeats News, July 16th, Citigroup lowered Microsoft's price target due to the company's AI investment putting greater pressure on short-term free cash flow and profit margin, but still maintains a buy rating.

Citigroup lowered Microsoft's target price from $620 to $570. The bank believes that Microsoft remains one of the clearest companies in AI software and cloud computing commercialization, but the capital expenditure pace of Azure data center construction, GPU procurement, and AI infrastructure expansion may continue to suppress investors' expectations for cash flow in the coming quarters.

The bank still believes that Copilot, Azure AI services, and enterprise customer migration will support long-term revenue growth. The main disagreement lies in the timeline: the market was previously more willing to price AI revenue in advance, but is now starting to demand Microsoft to demonstrate that these expenditures can more quickly translate into profit.

Mizuho and Wells Fargo have also recently lowered Microsoft's target price but maintain a positive rating. The common judgment of multiple institutions is that Microsoft's AI assets remain attractive, but the stock price needs to digest the high capital expenditure in the short term, the traditional software business being reshaped by AI, and the pressure of reevaluating Azure's growth expectations.