There’s a “rich” catalyst path ahead for Microsoft shares, according to Citi. The firm initiated a positive 90-day catalyst watch on Microsoft shares. While the tech giant’s stock is up nearly 40% year to date, it has lagged on a relative basis since it issued disappointing quarterly revenue guidance in July. Microsoft shares have declined 5% since, while other shares in its peer group have gained 4.9%. “We see an interesting catalyst path for the stock thru year-end with several AI events, which may feature GA releases for CoPilot where our proprietary customer checks are positive,” analyst Tyler Radke wrote in a Monday note, referring to “general availability.” “While still early, we believe shares could trade well into FQ1 earnings with stabilizing PC market, better Azure inputs, and a revenue acceleration trend,” the analyst added. Azure, Microsoft’s cloud computing platform, recorded 26% year-over-year growth last quarter . But Microsoft still lags behind Amazon in the cloud infrastructure business. The company has several artificial intelligence events scheduled for this fall, starting with its Envision conference Sept. 13, followed by another AI event, on Sept. 21. Microsoft Ignite , for developers and IT professionals, is scheduled for November. “While the details and agenda for these events are still limited, we expect to get favorable updates on GenAI monetization, including General Availability announcements for CoPilots. We understand investor sentiment may be less optimistic on CoPilot since the original announcement, however we note our customer work including the dozens of CIOs we spoke with were almost unanimously positive on CoPilot capabilities/features,” Radke said. Microsoft has about another six weeks until its next quarterly earnings announcement. Radke’s initial read on fiscal first-quarter earnings is more positive owing to inputs on cloud consumption trends and stabilization in the PC market. “GenAI is changing optimization conversations for Microsoft, as they are seeing strong interest in converting more workloads in order to be ‘ai-enabled’ versus the cost optimization conversations they were having 12 months ago,” said Radke. — CNBC’s Michael Bloom contributed to this report.
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