Microsoft (NASDAQ:MSFT) Trading 1.8% Higher - Still a Buy?

Key Points

• Microsoft shares rose 1.8% in mid-day trading, with the stock reaching as high as $377.22 after a recent close of $367.34. Trading volume was also above average, suggesting renewed investor attention.
• The company is making a major push in AI infrastructure, highlighted by a 20-year deal with Chevron for a natural-gas power facility in Texas to support a planned $7 billion AI data center. Microsoft is also expanding AI commercialization through projects like Copilot integration in advertising campaigns.
• Despite supportive analyst ratings and strong recent earnings, Microsoft still faces mixed sentiment from investors due to heavy AI spending, legal overhang from a securities class action, and broader pressure on mega-cap tech stocks.

Microsoft Corporation (NASDAQ:MSFT - Get Free Report) rose 1.8% during mid-day trading on Tuesday . The stock traded as high as $377.22 and last traded at $373.94. 39,431,247 shares were traded during mid-day trading, an increase of 9% from the average daily volume of 36,088,836 shares. The stock had previously closed at $367.34.

Key Headlines Impacting Microsoft

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Microsoft announced a major long-term infrastructure deal with Chevron for a 20-year, 2.67-gigawatt natural-gas power facility in West Texas to support a planned $7 billion AI data center. The project helps secure dedicated power for Microsoft’s expanding AI/cloud workloads and underscores continued investment in AI capacity. Reuters article
• Positive Sentiment: Microsoft is also getting credit for additional AI commercialization efforts, including Stagwell’s integration of Microsoft Advertising with Copilot in live media campaigns, which shows the company moving AI from pilot projects into real business use cases. Yahoo Finance article
• Neutral Sentiment: Several commentary pieces argue Microsoft is attractively valued after its pullback, with some analysts and writers saying the stock may offer meaningful upside if AI and cloud growth remain strong. 24/7 Wall St. article
• Neutral Sentiment: At the same time, several reports note that Microsoft remains under pressure from a broader selloff in AI/mega-cap tech as investors question whether heavy AI spending is translating into near-term returns. Yahoo Finance article
• Negative Sentiment: Microsoft is facing multiple reminders about a pending securities fraud class action tied to alleged Copilot and Azure misstatements, keeping legal overhang in focus ahead of the August 11 deadline. Business Wire article
• Negative Sentiment: Some analyst commentary remains cautious on Microsoft’s near-term setup, with concerns that the stock’s AI narrative is still being tested by high capex, competitive pressures, and weaker technical momentum. Finbold article

Wall Street Analysts Forecast Growth

Several research analysts have recently weighed in on the stock. BMO Capital Markets decreased their price target on shares of Microsoft from $575.00 to $505.00 and set an "outperform" rating on the stock in a report on Tuesday, April 28th. New Street Research reduced their target price on Microsoft from $675.00 to $600.00 and set a "buy" rating for the company in a research report on Thursday, April 30th. HSBC lowered their price target on Microsoft from $593.00 to $571.00 in a report on Thursday, April 30th. Benchmark reissued a "buy" rating and set a $525.00 price objective (up from $450.00) on shares of Microsoft in a report on Tuesday, April 28th. Finally, Truist Financial decreased their price objective on shares of Microsoft from $675.00 to $575.00 and set a "buy" rating on the stock in a research report on Thursday, April 30th. Forty-one equities research analysts have rated the stock with a Buy rating and six have assigned a Hold rating to the company's stock. Based on data from MarketBeat, Microsoft presently has an average rating of "Moderate Buy" and a consensus price target of $561.20.

Microsoft Price Performance

The firm has a market capitalization of $2.78 trillion, a P/E ratio of 22.26, a PEG ratio of 1.37 and a beta of 1.11. The business's 50-day simple moving average is $412.26 and its 200 day simple moving average is $424.28. The company has a quick ratio of 1.27, a current ratio of 1.28 and a debt-to-equity ratio of 0.08.

Microsoft (NASDAQ:MSFT - Get Free Report) last announced its quarterly earnings data on Wednesday, April 29th. The software giant reported $4.27 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $4.06 by $0.21. The company had revenue of $82.89 billion during the quarter, compared to analysts' expectations of $81.44 billion. Microsoft had a net margin of 39.34% and a return on equity of 31.94%. The firm's revenue was up 18.3% on a year-over-year basis. During the same quarter in the prior year, the company earned $3.46 EPS. Sell-side analysts forecast that Microsoft Corporation will post 16.76 earnings per share for the current year.

Microsoft Dividend Announcement

The business 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 $0.91 dividend. The ex-dividend date is Thursday, August 20th. This represents a $3.64 annualized dividend and a dividend yield of 1.0%. Microsoft's payout ratio is currently 21.67%.

Insider Activity

In other Microsoft news, CEO Judson Althoff sold 15,500 shares of the business's stock in a transaction that occurred on Monday, June 1st. The stock was 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 in the company, valued at approximately $50,928,792.23. The trade was a 12.30% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which can be accessed through this hyperlink. Also, EVP Takeshi Numoto sold 4,500 shares of the stock in a transaction that occurred on Wednesday, June 10th. The shares were sold at an average price of $402.84, for a total value of $1,812,780.00. Following the sale, the executive vice president directly owned 47,468 shares of the company's stock, valued at approximately $19,122,009.12. This trade represents a 8.66% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. In the last quarter, insiders sold 23,762 shares of company stock valued at $10,508,361. Insiders own 0.03% of the company's stock.

Institutional Investors Weigh In On Microsoft

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in MSFT. Longfellow Investment Management Co. LLC raised its holdings in shares of Microsoft by 51.3% during the second quarter. Longfellow Investment Management Co. LLC now owns 59 shares of the software giant's stock valued at $29,000 after acquiring an additional 20 shares in the last quarter. Bernzott Capital Advisors purchased a new position in Microsoft during the 4th quarter valued at $34,000. Timmons Wealth Management LLC purchased a new position in Microsoft during the 4th quarter valued at $36,000. Fairway Wealth LLC raised its holdings in Microsoft by 287.0% in the 4th quarter. Fairway Wealth LLC now owns 89 shares of the software giant's stock worth $43,000 after purchasing an additional 66 shares in the last quarter. Finally, LSV Asset Management purchased a new stake in shares of Microsoft in the 4th quarter worth about $44,000. 71.13% of the stock is currently owned by institutional investors.

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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