Citigroup has issued a report anticipating Microsoft (MSFT, Financial) to soon announce its financial results for the third fiscal quarter ending March. Under current macroeconomic uncertainties due to tariffs, Citigroup projects Azure's year-over-year growth to slow to 31%, which is at the lower end of guidance. The future of Azure also faces potential risks of further deceleration.
Citigroup has revised its forecasts for Microsoft's third-quarter revenue, gross profit, and earnings per share down by 2.4%, 3.2%, and 4.2%, respectively. Reflecting a broader global economic slowdown, Citigroup also downgraded its predictions for Microsoft's major business units by an average of 3 percentage points for the fiscal year 2026. Currently, the annual revenue is expected to increase by 12% year-on-year, compared to the market's expectation of 13.5%. The full-year earnings per share are predicted to reach $14.71, which is nearly 1% lower than market forecasts.
Despite these adjustments, Microsoft's performance remains superior to other large-cap companies, making it a more defensive investment choice. Therefore, Citigroup maintains a "buy" rating for the stock, although it has lowered the target price from $497 to $480.
