Microsoft post on AI spend ‘modest positive,’ says Citi

Citi keeps a Buy rating on Microsoft (MSFT) with a $497 price target after Brad Smith on Friday authored a blog post outlining the company’s vision for advancing artificial intelligence. While many aspects were high level around the American opportunity around AI, the call out of the company on track to spend approximately $80Bn in AI data center capex in fiscal 2025 was particularly notable, the analyst tells investors in a research note. Citi believes the $80B encompasses essentially all of Microsoft’s data center related spending for fiscal 2025. The $80B is in-line with consensus estimates of total company capex and finance leases of $85B for the year, contends the firm. It says that while the blog numbers don’t suggest a significant surprise, it views the news as a “modest positive” as it “de-risks” a capex cut scenario for Microsoft.