Citi's research report stated that Microsoft (MSFT.US) performed well in the first quarter ending in late September, with healthy revenue and profits exceeding expectations. Although new production capacity related to partners is limited, leading to a 1-2 percentage point decrease in Azure's second-quarter growth guidance, the performance of large long-term Azure contracts remained strong, driving a 23% increase in commercial orders, leading Citi to believe that Azure growth will improve in the second half of the fiscal year. Management also reiterated a bullish outlook on the consumer market, expecting accelerated growth in the second half of the fiscal year.
Citi believes that this stock price pullback is a good time to buy, as Microsoft's AI revenue surpasses $10 billion, expecting accelerated growth of Azure in the second half of the year, giving a target price of $497 and a rating of 'buy'.