Microsoft (NASDAQ:MSFT) Shares Down 1.1% - Here's What Happened

Key Points

• Microsoft shares fell 1.1% in Tuesday trading, slipping to about $397.75 after closing at $402.29 the prior day.
• The company is doubling down on AI through expanded partnerships with Mistral and AMD, which could strengthen Azure’s infrastructure and broaden Microsoft’s AI offerings.
• Despite positive analyst sentiment and strong recent earnings, legal uncertainty is building as Microsoft faces class-action lawsuit notices tied to AI/Copilot claims and alleged securities fraud.

Shares of Microsoft Corporation (NASDAQ:MSFT - Get Free Report) traded down 1.1% during trading on Tuesday . The stock traded as low as $396.32 and last traded at $397.75. 23,747,326 shares changed hands during mid-day trading, a decline of 36% from the average daily volume of 37,279,875 shares. The stock had previously closed at $402.29.

Microsoft News Summary

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Microsoft deepened its AI partnership with Mistral, including a multibillion-dollar deal to support Mistral’s Europe-based AI infrastructure and expand access to Mistral models across Microsoft’s AI platform. Investors may view this as strengthening Microsoft’s enterprise AI footprint and European compliance-ready offerings. Article Title
• Positive Sentiment: Microsoft also expanded its strategic partnership with AMD, planning to deploy AMD Helios rack-scale systems across Azure. That could improve Microsoft’s AI infrastructure supply options, reduce reliance on a single chip vendor, and support future Azure growth. Article Title
• Positive Sentiment: Several analysts remained constructive, with Morgan Stanley reportedly reiterating an overweight stance and a $600 target, while CLSA upgraded Microsoft to moderate buy. Those calls reinforce the view that Microsoft’s AI and cloud franchises still have long-term upside. Article Title
• Neutral Sentiment: Investor commentary ahead of earnings focused on Azure growth, AI spending, Copilot adoption, and free-cash-flow conversion. That means the next earnings report could drive a significant re-rating, but the market is still waiting for proof that heavy AI investment is translating into faster monetization. Article Title
• Negative Sentiment: Microsoft is facing a wave of class-action lawsuit notices alleging misleading AI/Copilot claims and securities-fraud issues. Even if the litigation is early-stage, it adds legal uncertainty and can weigh on sentiment. Article Title

Analysts Set New Price Targets

Several research firms have issued reports on MSFT. Tigress Financial raised their price target on shares of Microsoft from $595.00 to $680.00 and gave the stock a "buy" rating in a report on Wednesday, May 6th. Rothschild & Co Redburn decreased their price objective on shares of Microsoft from $450.00 to $400.00 and set a "neutral" rating for the company in a research report on Thursday, April 23rd. Stifel Nicolaus lowered their target price on shares of Microsoft from $415.00 to $400.00 and set a "hold" rating for the company in a research note on Thursday, June 25th. Weiss Ratings restated a "hold (c)" rating on shares of Microsoft in a report on Monday, July 6th. Finally, Citizens Jmp began coverage on shares of Microsoft in a research report on Monday, June 1st. They set an "outperform" rating and a $550.00 price target on the stock. Forty-two analysts have rated the stock with a Buy rating and seven have given a Hold rating to the stock. According to MarketBeat, the company has an average rating of "Moderate Buy" and a consensus target price of $556.37.

Microsoft Stock Down 1.1%

The company has a market cap of $2.95 trillion, a P/E ratio of 23.68, a PEG ratio of 1.19 and a beta of 1.13. The stock's 50-day moving average price is $400.07 and its 200-day moving average price is $410.17. The company has a current ratio of 1.28, a quick ratio of 1.27 and a debt-to-equity ratio of 0.08.

Microsoft (NASDAQ:MSFT - Get Free Report) last issued its earnings results on Wednesday, April 29th. The software giant reported $4.27 EPS for the quarter, beating analysts' consensus estimates of $4.06 by $0.21. Microsoft had a return on equity of 31.94% and a net margin of 39.34%.The business had revenue of $82.89 billion during the quarter, compared to analyst estimates of $81.44 billion. During the same period in the previous year, the company posted $3.46 EPS. The firm's revenue was up 18.3% compared to the same quarter last year. As a group, research analysts forecast that Microsoft Corporation will post 16.71 EPS for the current year.

Microsoft Dividend Announcement

The company also recently disclosed a quarterly dividend, which will be paid on Thursday, September 10th. Stockholders of record on Thursday, August 20th will be issued a dividend of $0.91 per share. The ex-dividend date is Thursday, August 20th. This represents a $3.64 annualized dividend and a dividend yield of 0.9%. Microsoft's payout ratio is currently 21.67%.

Insider Transactions at Microsoft

In related news, CEO Judson Althoff sold 15,500 shares of Microsoft stock in a transaction on Monday, June 1st. The shares were sold at an average price of $460.99, for a total value of $7,145,345.00. Following the completion of the sale, the chief executive officer owned 110,477 shares of the company's stock, valued at approximately $50,928,792.23. This trade represents a 12.30% decrease in their position. The transaction was disclosed in a document filed with the SEC, which can be accessed through the SEC website. Also, EVP Takeshi Numoto sold 4,500 shares of the business's stock in a transaction on Wednesday, June 10th. The shares were sold at an average price of $402.84, for a total transaction of $1,812,780.00. Following the sale, the executive vice president owned 47,468 shares of the company's stock, valued at $19,122,009.12. This trade represents a 8.66% decrease in their position. The SEC filing for this sale provides additional information. Insiders have sold 23,762 shares of company stock valued at $10,508,361 over the last ninety days. 0.03% of the stock is owned by company insiders.

Institutional Inflows and Outflows

A number of hedge funds have recently made changes to their positions in the business. Summitry LLC increased its position in shares of Microsoft by 3.4% during the second quarter. Summitry LLC now owns 221,816 shares of the software giant's stock worth $82,742,000 after acquiring an additional 7,354 shares in the last quarter. QV Investors Inc. acquired a new position in Microsoft during the 2nd quarter valued at about $14,346,000. Meritas Wealth Management LLC increased its holdings in Microsoft by 5.8% during the 2nd quarter. Meritas Wealth Management LLC now owns 6,531 shares of the software giant's stock worth $2,436,000 after purchasing an additional 358 shares in the last quarter. Leslie Global Wealth LLC raised its stake in shares of Microsoft by 2.9% in the second quarter. Leslie Global Wealth LLC now owns 3,138 shares of the software giant's stock worth $1,171,000 after purchasing an additional 88 shares during the last quarter. Finally, Legacy Advisory Services LLC lifted its holdings in shares of Microsoft by 95.2% in the second quarter. Legacy Advisory Services LLC now owns 2,198 shares of the software giant's stock valued at $820,000 after purchasing an additional 1,072 shares in the last quarter. 71.13% of the stock is currently owned by institutional investors and hedge funds.

Microsoft Company Profile

Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.

Microsoft's product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).

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