Microsoft (NASDAQ:MSFT) Stock Price Down 1.1% on Analyst Downgrade

Key Points

• Shares fell 1.1% after Raymond James cut its price target to $540 (keeping an "outperform" rating); several brokers trimmed targets but MarketBeat's consensus remains a Moderate Buy with an average target of $563.72.
• Microsoft beat Q3 estimates—EPS $4.27 vs. $4.04 and revenue $82.89B vs. $81.30B—and announced a quarterly dividend of $0.91 per share.
• Sentiment is weighed down by the OpenAI partnership reset, mixed analyst reactions and legal/regulatory headlines, even as institutional ownership remains very large.

Shares of Microsoft Corporation (NASDAQ:MSFT - Get Free Report) fell 1.1% during trading on Wednesday after Raymond James Financial lowered their price target on the stock from $580.00 to $540.00. Raymond James Financial currently has an outperform rating on the stock. Microsoft traded as low as $420.29 and last traded at $424.46. 32,260,359 shares were traded during mid-day trading, a decline of 9% from the average session volume of 35,399,301 shares. The stock had previously closed at $429.25.

Other research analysts also recently issued reports about the company. The Goldman Sachs Group restated a "buy" rating on shares of Microsoft in a report on Thursday, February 12th. TD Cowen reduced their price objective on Microsoft from $610.00 to $540.00 and set a "buy" rating on the stock in a report on Thursday, April 16th. Scotiabank reduced their price objective on Microsoft from $650.00 to $600.00 and set a "sector outperform" rating on the stock in a report on Thursday, January 29th. BMO Capital Markets reduced their price objective on Microsoft from $575.00 to $505.00 and set an "outperform" rating on the stock in a report on Tuesday. Finally, Rothschild & Co Redburn cut their target price on shares of Microsoft from $450.00 to $400.00 and set a "neutral" rating on the stock in a research report on Thursday, April 23rd. Two equities research analysts have rated the stock with a Strong Buy rating, thirty-eight have issued a Buy rating and five have assigned a Hold rating to the stock. Based on data from MarketBeat, Microsoft has a consensus rating of "Moderate Buy" and an average target price of $563.72.

Insiders Place Their Bets

In other news, Director John W. Stanton acquired 5,000 shares of the business's stock in a transaction dated Wednesday, February 18th. The shares were purchased at an average price of $397.35 per share, with a total value of $1,986,750.00. Following the transaction, the director directly owned 83,905 shares in the company, valued at approximately $33,339,651.75. This represents a 6.34% increase in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, EVP Kathleen T. Hogan sold 12,321 shares of Microsoft stock in a transaction that occurred on Friday, March 6th. The stock was sold at an average price of $409.52, for a total transaction of $5,045,695.92. Following the completion of the transaction, the executive vice president directly owned 137,933 shares in the company, valued at approximately $56,486,322.16. The trade was a 8.20% decrease in their position. The SEC filing for this sale provides additional information. Company insiders own 0.03% of the company's stock.

Microsoft News Summary

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Prediction markets and traders are pricing a high probability that Microsoft will beat Q3 EPS, signaling investor expectations for stronger-than-forecast results that could boost the stock if management delivers. Microsoft Earnings Prediction Market Preview: What Will Satya Nadella Say?
• Positive Sentiment: Copilot traction and partner rollouts (notably Accenture) are highlighted as potential upside drivers for MSFT’s AI monetization — strong adoption could alleviate investor concerns about near-term monetization of AI investments. Microsoft Copilot: The Dark Horse Of Software Giant's Q3 Earnings?
• Neutral Sentiment: Macro and market context: a Fed decision and a cluster of Big Tech earnings today are keeping volatility elevated — that can amplify post‑earnings moves in MSFT irrespective of the print. Equities Fall Intraday Ahead of Fed Rate Decision; Oil Prices Jump
• Neutral Sentiment: Options and volatility outlook: analysts and trading desks expect a meaningful post‑earnings swing in MSFT, so implied volatility and positioning could exaggerate moves after the release. Here's How Much Traders Expect Microsoft's Stock to Move After Earnings
• Negative Sentiment: The most market‑moving negative item is the OpenAI partnership reset — Microsoft lost model exclusivity and revenue‑share terms were changed, which many investors view as a concession that increases competitive risk for Azure AI services. That headline has been a major weight on sentiment. Microsoft and OpenAI gut their exclusive deal, freeing OpenAI to sell on AWS and Google Cloud
• Negative Sentiment: Analyst reactions are mixed — while some firms reaffirm buys and raise targets, others have cut price targets or flagged nearer‑term risks around OpenAI exposure and AI capex; mixed guidance from brokers contributes to today’s downside pressure. Raymond James adjusts price target on Microsoft to $540 from $580
• Negative Sentiment: Legal and regulatory risks — the high‑profile Musk/Altman/OpenAI trial and a China patent case raise headline risk that could pressure sentiment if developments turn unfavorable. Elon Musk Asks, 'Do You Want To Set Legal Precedent' ...
• Negative Sentiment: Operational/headline noise — reports of voluntary buyouts and security‑related phishing campaigns (impersonating Microsoft support) add incremental short‑term worry about execution and reputation. Tech Job Cuts: Microsoft Offers Voluntary Buyouts To Employees

Institutional Inflows and Outflows

Institutional investors and hedge funds have recently modified their holdings of the company. Vanguard Group Inc. grew its stake in Microsoft by 2.3% during the 4th quarter. Vanguard Group Inc. now owns 717,942,580 shares of the software giant's stock worth $347,211,391,000 after buying an additional 15,955,898 shares during the last quarter. State Street Corp grew its position in Microsoft by 2.1% during the 4th quarter. State Street Corp now owns 306,150,608 shares of the software giant's stock worth $148,060,557,000 after purchasing an additional 6,388,930 shares during the last quarter. Geode Capital Management LLC grew its position in Microsoft by 1.1% during the 4th quarter. Geode Capital Management LLC now owns 182,618,400 shares of the software giant's stock worth $88,056,019,000 after purchasing an additional 1,911,142 shares during the last quarter. Morgan Stanley grew its position in Microsoft by 0.8% during the 4th quarter. Morgan Stanley now owns 121,220,561 shares of the software giant's stock worth $58,624,690,000 after purchasing an additional 980,439 shares during the last quarter. Finally, Norges Bank purchased a new stake in Microsoft during the 4th quarter worth approximately $50,664,631,000. Hedge funds and other institutional investors own 71.13% of the company's stock.

Microsoft Stock Performance

The company has a market cap of $3.15 trillion, a PE ratio of 26.55, a P/E/G ratio of 1.60 and a beta of 1.11. The company has a current ratio of 1.39, a quick ratio of 1.38 and a debt-to-equity ratio of 0.09. The firm's 50-day simple moving average is $394.60 and its two-hundred day simple moving average is $448.82.

Microsoft (NASDAQ:MSFT - Get Free Report) last released its earnings results on Wednesday, April 29th. The software giant reported $4.27 earnings per share for the quarter, topping the consensus estimate of $4.04 by $0.23. The company had revenue of $82.89 billion for the quarter, compared to the consensus estimate of $81.30 billion. Microsoft had a net margin of 39.04% and a return on equity of 32.34%. As a group, research analysts anticipate that Microsoft Corporation will post 16.54 earnings per share for the current fiscal year.

Microsoft Announces Dividend

The company also recently declared a quarterly dividend, which will be paid on Thursday, June 11th. Shareholders of record on Thursday, May 21st will be paid a dividend of $0.91 per share. This represents a $3.64 annualized dividend and a yield of 0.9%. The ex-dividend date is Thursday, May 21st. Microsoft's payout ratio is presently 22.76%.

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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