Microsoft (MSFT): Citi's Radke Sees Revenue Growth Topping 20% as AI Splits Software

Citi Splits Software Into Winners and Losers

Tyler Radke, who co-heads US software equity research at Citi, expects Microsoft (MSFT) revenue growth to clear 20% as artificial intelligence splits the software market into winners and losers. In a Bloomberg Television interview, Radke said the sector looked like a different market earlier this year, when a chip stock at the bottom of its own group still beat the best performer among software stocks. Leadership has since reversed, in his view, because AI now decides where corporate technology budgets land. He named Microsoft, Palantir and Snowflake, the cloud data company, as the vendors gaining, while Adobe and smaller application vendors feel pressure as IT budgets shift toward AI projects. Microsoft anchors his case. It is the name he leans on hardest, because it already owns the distribution that AI products need. Office is priced under $100 a month and bundles security with Copilot, the company's AI assistant, while rivals charge hundreds of dollars monthly for comparable packages. A company already paying for Office, in other words, gets Copilot inside a subscription it would renew anyway, and that gap leaves Microsoft room to extract more value from the same customers over time. For reference, Microsoft's revenue grew 18% in the quarter ended June 30, so a move past 20% would mean an acceleration, not a continuation. A Citi survey of chief information officers adds weight to the argument: it places Microsoft's in-house AI models near the leading AI labs, meaning enterprise buyers treat the company's models as competitive in their own right. Radke did not give a timeline for when growth would cross the 20% line. The stakes are concrete: AI spending comes out of the same budgets that fund seats, licenses and renewals across the rest of the software stack, so the winners' gains arrive directly as the losers' shortfalls.

Salesforce's $47.50 Braze Bid Shows the Pressure

Radke pointed to consolidation as the likely next phase for the pressured side of the market. In a sector where smaller application vendors lose budget share to AI projects, buyouts become the exit route. Salesforce gave the thesis a fresh example on Tuesday. A filing with the SEC shows the company agreed to buy Braze, a customer engagement platform, for $47.50 per share in cash, and the cash terms hand Braze's shareholders a fixed price per share. The filing covers the agreement itself; it does not lay out an operating plan for Braze after closing. Salesforce shares rose about 20% after its last quarterly report, a run Radke cited, but he framed the question differently: after half a dozen large deals, can Salesforce actually accelerate organic growth? Financing conditions sit behind much of the pressure on the losing side. Neoclouds, the specialist operators that rent GPU capacity to AI developers rather than selling software, have sold out their 2026 capacity, Radke said, which makes a total AI bust hard to picture. Citi's work on neocloud debt blames bond yields, not weak demand, for the selloff in those providers, a distinction that concentrates the risk on balance sheets rather than on end demand. Demand, in other words, is not the constraint; money is. Scale then decides who survives, and larger providers are better placed to outlast smaller rivals while capital stays expensive, a logic that mirrors the winners' column: budgets flow to a handful of platforms able to fund their own AI development. Katie Stockton, founder of research firm Fairlead Strategies, counts wider credit spreads among three warning signs for equities. Her flags sit alongside Radke's financing argument rather than replacing it: both point to the cost of capital as the variable that decides how far the divide travels. If financing stays costly, the split could widen, with strategic buyers and private equity firms circling pressured makers as targets.

The stock itself sits between two well-attended levels while the sector argument plays out. COINOTAG data shows Microsoft trading at $529.25, down 1.03% over the past 24 hours inside a $526.79–$537.83 range, with the daily trend rated sideways. COINOTAG's composite scoring rates the strongest support at $525.29, 82 out of 100, and the nearest resistance at $530.78, 75 out of 100. The RSI reading of 54.3 sits neutral and the MACD signal is bearish, so momentum has cooled without breaking down. A daily close above $530.78 would clear the first barrier while Radke's growth call waits on the next earnings print.