Citi has raised its price target for Microsoft (MSFT, Financial) from $480 to $540, suggesting a potential 19% increase from its recent closing. The bank maintains a buy rating on the stock, which has already risen 7% this year. This optimism is driven by Microsoft's robust earnings, revenue growth, cost efficiency, and improvements in its Azure cloud business.
Microsoft has announced plans to lay off approximately 6,000 employees, or 3% of its workforce. According to analyst Tyler Radke, these layoffs are expected to positively impact the stock by potentially generating over $1 billion in incremental net savings by the 2026 fiscal year. These savings will help offset incremental depreciation and capital expenditure costs. Additionally, some of the funds will be reinvested in research and development, with a focus on prioritizing its AI initiatives.
