Microsoft (NASDAQ:MSFT) Trading Down 1.4% on Analyst Downgrade

Key Points

• Microsoft shares fell 1.4% after DBS Bank cut its price target sharply from $678 to $573, adding to near-term pressure on the stock.
• Several other brokerages also lowered their targets in recent reports, though the overall analyst view remains Moderate Buy with an average price target of $562.69.
• Despite the stock pullback, Microsoft recently posted strong quarterly results with earnings and revenue beats, while investors continue to watch AI spending, margin pressure, and a reported hedge fund stake reduction as key overhangs.

Microsoft Corporation (NASDAQ:MSFT - Get Free Report)'s share price dropped 1.4% on Friday after Dbs Bank lowered their price target on the stock from $678.00 to $573.00. The stock traded as low as $414.00 and last traded at $415.00. Approximately 33,110,163 shares were traded during trading, a decline of 7% from the average daily volume of 35,562,043 shares. The stock had previously closed at $420.77.

A number of other brokerages also recently weighed in on MSFT. DA Davidson decreased their target price on shares of Microsoft from $650.00 to $550.00 and set a "buy" rating for the company in a research note on Thursday, April 30th. Scotiabank cut their price objective on Microsoft from $600.00 to $550.00 and set an "outperform" rating for the company in a research report on Thursday, April 30th. Wall Street Zen lowered shares of Microsoft from a "buy" rating to a "hold" rating in a research note on Sunday, January 18th. Tigress Financial boosted their price target on Microsoft from $595.00 to $680.00 and gave the company a "buy" rating in a report on Wednesday. Finally, New Street Research dropped their target price on shares of Microsoft from $675.00 to $600.00 and set a "buy" rating on the stock in a research report on Thursday, April 30th. One investment analyst has rated the stock with a Strong Buy rating, thirty-eight have issued a Buy rating and seven have given a Hold rating to the stock. Based on data from MarketBeat, the stock currently has an average rating of "Moderate Buy" and an average price target of $562.69.

Insider Transactions at Microsoft

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

Microsoft News Roundup

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Analysts and market commentary remain constructive after Microsoft’s strong quarterly results, with several reports saying the stock still looks attractive on valuation and that Azure/AI growth could keep driving upside. Article Title
• Positive Sentiment: Microsoft announced a partnership with CAISI and AISI to advance AI model testing standards, reinforcing its position as a key enterprise AI leader and potentially supporting longer-term trust in its AI ecosystem. Article Title
• Positive Sentiment: Several reports highlighted growing adoption across Microsoft’s AI partner network, suggesting its Copilot and cloud ecosystem continue to gain traction. Article Title
• Positive Sentiment: Some articles pointed to Microsoft as one of the stronger long-term AI and cloud franchises, with bullish analysts still raising price targets despite capex concerns. Article Title
• Neutral Sentiment: Microsoft reported strong fiscal Q3 results last week, including earnings and revenue beats, which still anchor the bullish case even as the stock trades unevenly in the near term.
• Negative Sentiment: The biggest drag today is a headline that hedge fund TCI/Chris Hohn slashed its Microsoft stake by about $8 billion, a move tied to concerns that AI competition could pressure Microsoft’s long-term edge. Article Title
• Negative Sentiment: Investors are also worried about Microsoft’s heavy AI spending and possible margin pressure, with multiple articles saying capex intensity and AI economics remain a key overhang on the stock.
• Negative Sentiment: Additional coverage on Microsoft potentially delaying or weakening its clean-energy goals adds to concerns that the AI buildout is creating operational tradeoffs. Article Title

Institutional Investors Weigh In On Microsoft

Hedge funds have recently modified their holdings of the stock. Longfellow Investment Management Co. LLC raised its position in Microsoft by 51.3% in the 2nd quarter. Longfellow Investment Management Co. LLC now owns 59 shares of the software giant's stock valued at $29,000 after purchasing an additional 20 shares during the last quarter. Bernzott Capital Advisors acquired a new stake in Microsoft in the 4th quarter worth about $34,000. Timmons Wealth Management LLC acquired a new position in shares of Microsoft during the 4th quarter worth $36,000. Bayforest Capital Ltd acquired a new position in shares of Microsoft during the third quarter worth $38,000. Finally, Fairway Wealth LLC increased its holdings in Microsoft by 287.0% in the fourth 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. 71.13% of the stock is owned by hedge funds and other institutional investors.

Microsoft Price Performance

The stock has a market capitalization of $3.08 trillion, a P/E ratio of 24.70, a price-to-earnings-growth ratio of 1.49 and a beta of 1.10. The company has a current ratio of 1.28, a quick ratio of 1.27 and a debt-to-equity ratio of 0.08. The business has a fifty day simple moving average of $396.79 and a 200 day simple moving average of $445.39.

Microsoft (NASDAQ:MSFT - Get Free Report) last issued its quarterly earnings data on Wednesday, April 29th. The software giant reported $4.27 earnings per share (EPS) for the quarter, topping 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 for the quarter, compared to analysts' expectations of $81.44 billion. During the same quarter in the prior year, the firm posted $3.46 EPS. The firm's quarterly revenue was up 18.3% on a year-over-year basis. On average, analysts expect that Microsoft Corporation will post 16.76 earnings per share for the current year.

Microsoft Announces Dividend

The business also recently announced a quarterly dividend, which will be paid on Thursday, June 11th. Stockholders of record on Thursday, May 21st will be paid a $0.91 dividend. This represents a $3.64 dividend on an annualized basis and a dividend yield of 0.9%. The ex-dividend date of this dividend is Thursday, May 21st. Microsoft's dividend payout ratio is currently 21.67%.

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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