Citi has taken an unusually bullish view of Microsoft’s Copilot business just as skepticism over enterprise AI software has hammered the company’s stock. CNBC reported Wednesday that the bank expects stronger Microsoft 365 Copilot adoption, higher net additions and improving customer feedback as more advanced intelligence features reach the suite.
Jim Cramer called the research note an “against-the-grain” take, saying it conflicted with the negative commentary he has heard about Copilot’s usefulness. Citi nevertheless reiterated its buy rating on Microsoft, while trimming its price target from $620 to $570 to reflect lower valuation multiples across enterprise software.
Citi’s analysts said channel checks pointed to “notable” momentum in Copilot adoption. The bank now expects Microsoft 365 Copilot net additions of about 8 million in the fiscal 2026 fourth quarter, up from roughly 5 million in the prior quarter.
That distinction matters. Microsoft sells several products under the Copilot label, including consumer-facing Windows and Microsoft 365 assistants, developer tools such as GitHub Copilot, and business AI services built around Azure. Citi’s thesis is specifically that paid Microsoft 365 Copilot traction is beginning to support a broader revenue and earnings-growth story rather than remaining an expensive feature bundle with unclear customer payback.
For IT buyers, the key question is not whether Copilot demos well, but whether organizations keep seats after pilots, expand deployments and can point to measurable productivity gains. Seat growth and renewal behavior would give Microsoft a more persuasive answer to concerns that generative AI will commoditize conventional software rather than create a new software revenue stream.
Microsoft’s most recent quarterly report showed continued cloud and AI momentum, but the company will need to show that capacity investment is converting into revenue at the pace markets expect. Microsoft has scheduled its fiscal 2026 fourth-quarter results for after the market closes on July 29, according to the company’s investor relations announcement.
CNBC said Microsoft shares rose more than 3% on Wednesday, though the stock remained down sharply for the year and below its late-October 2025 record close. The broader selloff in enterprise software has been driven by a different AI argument: that customers may use AI to build or replace tools they previously licensed from large vendors.
Microsoft’s July 29 earnings report should provide the next useful read on whether paid Copilot usage is moving beyond pilots and into sustained enterprise deployments.
Jim Cramer called the research note an “against-the-grain” take, saying it conflicted with the negative commentary he has heard about Copilot’s usefulness. Citi nevertheless reiterated its buy rating on Microsoft, while trimming its price target from $620 to $570 to reflect lower valuation multiples across enterprise software.
The bet: Copilot adoption is improving
Citi’s analysts said channel checks pointed to “notable” momentum in Copilot adoption. The bank now expects Microsoft 365 Copilot net additions of about 8 million in the fiscal 2026 fourth quarter, up from roughly 5 million in the prior quarter.That distinction matters. Microsoft sells several products under the Copilot label, including consumer-facing Windows and Microsoft 365 assistants, developer tools such as GitHub Copilot, and business AI services built around Azure. Citi’s thesis is specifically that paid Microsoft 365 Copilot traction is beginning to support a broader revenue and earnings-growth story rather than remaining an expensive feature bundle with unclear customer payback.
For IT buyers, the key question is not whether Copilot demos well, but whether organizations keep seats after pilots, expand deployments and can point to measurable productivity gains. Seat growth and renewal behavior would give Microsoft a more persuasive answer to concerns that generative AI will commoditize conventional software rather than create a new software revenue stream.
Azure remains the safer part of the story
Cramer was more comfortable with Citi’s positive assessment of Azure, Microsoft’s cloud platform. Azure has been a major beneficiary of enterprise AI workloads, although investors have also worried that Microsoft’s huge spending on data centers and AI infrastructure could pressure returns if demand fails to translate into durable revenue.Microsoft’s most recent quarterly report showed continued cloud and AI momentum, but the company will need to show that capacity investment is converting into revenue at the pace markets expect. Microsoft has scheduled its fiscal 2026 fourth-quarter results for after the market closes on July 29, according to the company’s investor relations announcement.
CNBC said Microsoft shares rose more than 3% on Wednesday, though the stock remained down sharply for the year and below its late-October 2025 record close. The broader selloff in enterprise software has been driven by a different AI argument: that customers may use AI to build or replace tools they previously licensed from large vendors.
Microsoft’s July 29 earnings report should provide the next useful read on whether paid Copilot usage is moving beyond pilots and into sustained enterprise deployments.
References
- Primary source: CNBC
Published: 2026-07-15T18:18:51+00:00
Why Jim Cramer is shocked by Citi's against-the-grain praise of Microsoft's Copilot
Jim Cramer said on CNBC on Wednesday that Citi's optimism is contrary to everything he has been hearing about Copilot being subpar.www.cnbc.com
