Wells Fargo and Citigroup have both lowered their stock price targets for Microsoft (MSFT), with Wells Fargo reducing its target from $650 to $625 and Citi cutting from $620 to $570. Despite the cuts, Wells Fargo's target still implies a 62.37% upside from current levels, while the Wall Street average target stands at $559.14.
Why the Cuts?
Microsoft shares have fallen 16% over the past six months, even as cloud revenue grows strongly. Analysts believe investors are skeptical about the company's massive AI capital expenditure plans, including the $2.5 billion Microsoft Frontier Company initiative. Unlike hardware makers like Nvidia, which have surged on AI demand, Microsoft is a software company and has not benefited as directly from the AI boom.
Geopolitical and Economic Factors
Ongoing US-Iran tensions and rising oil prices may also be weighing on the outlook. Inflation fell 0.4% in June 2026, the biggest monthly drop in over six months, but July could see a rebound. Despite these headwinds, Wall Street remains optimistic: MSFT hit an all-time high of $555.45 in July 2025, and analysts on average expect it to surpass that peak again soon.