Citi Praises Microsoft's Copilot, Jim Cramer Expresses Surprise

Citi analysts have stepped in to support Microsoft's Copilot AI assistant, which has garnered mixed reactions. In a client note released Wednesday, Citi projected that Copilot, along with its Azure cloud service, will drive strong fiscal 2026 fourth-quarter results and set the stage for accelerated revenue and earnings per share growth through fiscal 2030.

Industry checks cited by the analysts indicate strengthening momentum in Copilot adoption and improving customer feedback as more advanced AI features are integrated into the suite. Consequently, Citi has increased its Copilot estimates, anticipating higher-than-usual upside with new Microsoft 365 Copilot net adds projected at 8 million, up from 5 million in the third quarter.

During a CNBC segment, Jim Cramer described Citi's view on Copilot as "against the grain" and likened reading the note to a journey through "Alice in Wonderland." Cramer stated that Citi's optimism contradicts the general sentiment he's heard regarding Copilot's performance. He did, however, acknowledge being pleased with Citi's positive assessment of Azure's performance.

Microsoft's stock rose more than 3% on Wednesday, but has seen an 18% decline year-to-date in 2025, underperforming the S&P 500. Citi maintained its buy rating but lowered its price target to $570 from $620, citing multiple compression in enterprise software. Industry-wide concerns about AI-driven disruptions have impacted other companies, including Salesforce and IBM.

Market skepticism surrounding Microsoft stock also centers on its reliance on OpenAI for Azure growth and potential capacity constraints within its cloud offerings. As major tech firms invest heavily in AI infrastructure, Microsoft needs to demonstrate Copilot's sustained traction to counter these concerns.