Citi analyst bullish on Microsoft's AI potential, raises target price to $520 USD
Citigroup analyst Tyler Radke raised Microsoft's target price to $520, citing Microsoft's ownership of OpenAI shares and its cooperation agreement with Oracle as indicators of Microsoft's potential in the field of artificial intelligence. Despite the potential impact of OpenAI's losses on Microsoft's earnings per share, analysts remain optimistic about Microsoft's overall performance, with an expected earnings per share of $2.93 and revenue forecasted at $634.37 billion for the next quarter
According to the financial news app Zhitong Finance, Citigroup analyst Tyler Radke has maintained a "buy" rating on Microsoft (MSFT.US) and raised the target price from $495 to $520. The reason behind this adjustment is Microsoft's significant stake in the AI startup company OpenAI and the recent positive news surrounding the company.
The latest reports indicate that OpenAI's annual revenue has more than doubled, reaching $3.4 billion. In addition, OpenAI has signed an agreement with Oracle (ORCL.US) to expand its cloud service capacity. Radke believes that both developments are "positive from a growth perspective" and highlight the strong capabilities of Microsoft's Azure cloud services.
While the news about OpenAI is a positive development for Microsoft, Radke also warns that Microsoft may be impacted by the significant losses in non-operating expenses of this startup led by Sam Altman, which could have an impact of $0.04 to $0.05 per share.
Nevertheless, analysts generally expect Microsoft to achieve earnings per share of $2.93 in the next quarter, with revenue expected to be $63.437 billion. This indicates that despite some potential financial risks, the market remains optimistic about Microsoft's overall performance