Citi analysts recently raised their target price for Microsoft to $520 from $495 while maintaining a Buy rating on the stock. They highlighted positive news from OpenAI regarding Microsoft’s Azure but expressed concerns about potentially underestimated expenses. OpenAI has reported significant revenue growth and cloud capacity contracts with ORCL, but analysts warn that consensus estimates may not fully account for potential losses incurred by Microsoft in its stake in OpenAI. While these losses may not significantly impact Microsoft’s overall business, Citi analysts believe that consensus EPS estimates could be overstated by $0.04 to $0.05 in the upcoming quarters. Despite slightly reducing near-term EPS estimates for 4Q24 and 1Q25, Citi raised its forecasts for FY27 and beyond. Overall, the analysts remain bullish on Microsoft’s prospects but caution that accounting for OpenAI losses could impact earnings estimates in the future.
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