Citi: Copilot Adoption Accelerating, Maintains Buy on Microsoft
N.R. Finch
Citi cut its Microsoft price target from $620 to $570 but maintained a Buy rating, delivering a rare bullish call on Copilot — channel checks show adoption momentum is picking up, directly contradicting the market's prevailing "Copilot isn't working" narrative.
The target got cut — why is that good news?
Citi lowered its Microsoft price target from $620 to $570 but kept the Buy rating.
The cut reflects sector-wide valuation compression in enterprise software, not Microsoft-specific deterioration — Salesforce is down 36% year-to-date; IBM plunged 25% in a single day after a software-business warning.
This means → Citi is saying the environment got tougher, so the valuation anchor moves down, but Microsoft's fundamentals have not broken.
Is Copilot actually working? What did Citi find?
Citi's channel checks show Copilot — Microsoft's AI assistant embedded across the Office suite — has notably stronger adoption momentum, with customer feedback improving steadily.
In plain terms = Citi talked to resellers and customers who sell and use Microsoft products; the answer was: more enterprises are genuinely adopting Copilot, and post-adoption reviews are getting better.
Citi raised its Copilot forecast accordingly: M365 Copilot is projected to add roughly 8 million net users in fiscal Q4, up from 5 million in Q3.
This reflects the rollout of more advanced IQ features — AI models with stronger reasoning — into the Copilot suite, lifting real-world utility.
Why doesn't the market believe it? What did Cramer say?
CNBC host Jim Cramer said he was surprised by Citi's Copilot call, noting it was the opposite of the "Copilot is underperforming" feedback he had been hearing.
He described reading the report as "like reading *Alice in Wonderland*" — meaning Citi's conclusion felt unreal to him.
Cramer did, however, endorse Citi's view that Azure cloud performance remains solid.
This means → The market consensus on Copilot is still negative; Citi's report is a clear contrarian voice.
Where does Microsoft's stock sit right now?
Microsoft rose more than 3% on the day, extending its monthly gain to 6%.
But the stock is still down roughly 18% year-to-date and about 27% below its all-time closing high of $542 set in late October 2025.
In plain terms = the short-term bounce is real, but on a yearly view Microsoft has badly lagged the S&P 500's 10%+ gain over the same period.
What comes next?
Citi expects Copilot and Azure momentum to carry into fiscal 2027, potentially driving revenue and EPS growth through fiscal 2030.
The most immediate test, though, is Microsoft's July 29 earnings — whether Copilot can show substantive user-growth data.
This means → Citi has drawn a long growth curve, but the market will look at the nearest data point first; earnings day is where bulls and bears collide.
Content is for reference only, not financial advice.