Microsoft (NASDAQ:MSFT) Shares Gap Down After Analyst Downgrade

Microsoft Corporation (NASDAQ:MSFT)’s stock price gapped down prior to trading on Thursday after Wolfe Research lowered their price target on the stock from $625.00 to $530.00. The stock had previously closed at $481.63, but opened at $439.99. Wolfe Research currently has an outperform rating on the stock. Microsoft shares last traded at $421.8740, with a volume of 54,732,892 shares changing hands.

A number of other brokerages have also weighed in on MSFT. TD Cowen restated a “buy” rating on shares of Microsoft in a research report on Thursday. Barclays reissued an “overweight” rating and set a $600.00 price objective (down previously from $610.00) on shares of Microsoft in a report on Thursday. Arete Research upped their target price on Microsoft from $710.00 to $730.00 in a report on Monday, October 27th. Scotiabank dropped their target price on Microsoft from $650.00 to $600.00 and set a “sector outperform” rating for the company in a research report on Thursday. Finally, Guggenheim restated a “buy” rating and set a $586.00 price target on shares of Microsoft in a report on Thursday, January 22nd. One equities research analyst has rated the stock with a Strong Buy rating, forty have assigned a Buy rating and three have given a Hold rating to the stock. According to data from MarketBeat.com, Microsoft has a consensus rating of “Moderate Buy” and a consensus target price of $597.73.

Insider Buying and Selling at Microsoft

In other news, CEO Judson Althoff sold 12,750 shares of the stock in a transaction on Tuesday, December 2nd. The shares were sold at an average price of $491.52, for a total transaction of $6,266,880.00. Following the completion of the sale, the chief executive officer directly owned 129,349 shares in the company, valued at $63,577,620.48. This represents a 8.97% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available through the SEC website. Also, insider Bradford L. Smith sold 38,500 shares of Microsoft stock in a transaction on Monday, November 3rd. The stock was sold at an average price of $518.64, for a total transaction of $19,967,640.00. Following the transaction, the insider directly owned 461,597 shares of the company’s stock, valued at $239,402,668.08. This represents a 7.70% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. In the last 90 days, insiders sold 54,100 shares of company stock valued at $27,598,872. 0.03% of the stock is currently owned by company insiders.

Key Microsoft News

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Large commercial deals and partnerships underpin continued demand — Microsoft landed a major cloud customer agreement (Perplexity, reported as a $750M deal), which demonstrates Azure can win sizable AI workloads and supports future revenue. Perplexity signs $750 million AI cloud deal with Microsoft
• Positive Sentiment: Long-term AI opportunity remains large — analysts and commentators note that potential liquidity events (e.g., an OpenAI IPO) and continued hyperscaler AI demand could boost infrastructure spending that benefits Microsoft’s cloud and services over time. Could A $1 Trillion OpenAI IPO Save The Day For Nvidia, Microsoft?
• Positive Sentiment: Backlog/RPO growth signals demand — Microsoft’s commercial remaining performance obligations (backlog) jumped materially year-over-year, implying multi-year contracted revenue tied to AI workloads. Microsoft demand backlog doubles to $625 billion
• Neutral Sentiment: Quarterly results were solid but mixed — MSFT beat on revenue and EPS (Q2 results) yet the company issued guidance and commentary that implied a modest moderation in Azure growth vs. prior quarter; the market is parsing growth vs. the cost profile. Microsoft Q2 earnings beat on top and bottom lines
• Neutral Sentiment: Options and sentiment flows amplify moves — unusually high call-option buying and heavy volume have increased intraday volatility and may accentuate both selloffs and snapbacks. Stock Of The Day: Is This The Bottom For Microsoft?
• Negative Sentiment: Investor backlash to capex and margin risk — the core negative: investors punished MSFT because AI capex jumped (reported ~$37.5B in the quarter) while Azure growth showed signs of slowing, raising doubts about near-term returns. That drove a sharp selloff and a big market-cap contraction. Microsoft tumbled 10% in a day and isn’t recovering premarket. Here’s why
• Negative Sentiment: Analyst cuts & guidance uncertainty — several firms trimmed price targets or flagged near-term Azure/margin risks, increasing downside pressure even as many maintain buy ratings longer term. These Analysts Slash Their Forecasts On Microsoft Following Q2 Results
• Negative Sentiment: Legal/investor scrutiny follows the shock drop — law firms have opened investigations and class-action notices have surfaced, which can keep sentiment fragile near-term. Microsoft Corporation Investigated on Behalf of Investors

Institutional Inflows and Outflows

A number of hedge funds and other institutional investors have recently made changes to their positions in MSFT. Vanguard Group Inc. increased its stake in shares of Microsoft by 2.3% in the 4th quarter. Vanguard Group Inc. now owns 717,942,580 shares of the software giant’s stock valued at $347,211,391,000 after acquiring an additional 15,955,898 shares in the last quarter. State Street Corp boosted its stake in Microsoft by 1.1% during the second quarter. State Street Corp now owns 299,196,519 shares of the software giant’s stock worth $148,823,341,000 after acquiring an additional 3,166,275 shares in the last quarter. Geode Capital Management LLC grew its holdings in Microsoft by 2.0% in the second quarter. Geode Capital Management LLC now owns 179,001,751 shares of the software giant’s stock worth $88,714,256,000 after purchasing an additional 3,532,054 shares during the period. Norges Bank bought a new stake in Microsoft in the second quarter valued at $50,493,678,000. Finally, Northern Trust Corp increased its stake in Microsoft by 16.1% in the fourth quarter. Northern Trust Corp now owns 83,787,746 shares of the software giant’s stock valued at $35,316,535,000 after purchasing an additional 11,600,470 shares in the last quarter. 71.13% of the stock is owned by institutional investors and hedge funds.

Microsoft Stock Down 0.7%

The company has a debt-to-equity ratio of 0.09, a current ratio of 1.39 and a quick ratio of 1.39. The firm’s fifty day moving average price is $475.83 and its two-hundred day moving average price is $499.71. The stock has a market cap of $3.20 trillion, a price-to-earnings ratio of 26.91, a price-to-earnings-growth ratio of 1.74 and a beta of 1.07.

Microsoft (NASDAQ:MSFT) last announced its quarterly earnings data on Wednesday, January 28th. The software giant reported $4.14 EPS for the quarter, beating analysts’ consensus estimates of $3.86 by $0.28. Microsoft had a return on equity of 32.34% and a net margin of 39.04%.The firm had revenue of $81.27 billion during the quarter, compared to analysts’ expectations of $80.28 billion. During the same quarter last year, the firm posted $3.23 earnings per share. The company’s revenue for the quarter was up 16.7% compared to the same quarter last year. Sell-side analysts forecast that Microsoft Corporation will post 13.08 earnings per share for the current fiscal year.

Microsoft Dividend Announcement

The firm also recently announced a quarterly dividend, which will be paid on Thursday, March 12th. Investors of record on Thursday, February 19th will be issued a $0.91 dividend. This represents a $3.64 dividend on an annualized basis and a dividend yield of 0.8%. The ex-dividend date is Thursday, February 19th. Microsoft’s dividend payout ratio is currently 22.76%.

About Microsoft

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).