Microsoft (NASDAQ:MSFT) Shares Down 5% Following Analyst Downgrade

Microsoft Corporation (NASDAQ:MSFT)’s share price fell 5% on Thursday after Daiwa Securities Group lowered their price target on the stock from $630.00 to $600.00. Daiwa Securities Group currently has a buy rating on the stock. Microsoft traded as low as $392.32 and last traded at $393.67. 65,236,466 shares were traded during mid-day trading, an increase of 74% from the average session volume of 37,398,906 shares. The stock had previously closed at $414.19.

A number of other equities analysts also recently weighed in on MSFT. Royal Bank Of Canada reaffirmed an “outperform” rating and issued a $640.00 price target on shares of Microsoft in a research note on Thursday, January 29th. Deutsche Bank Aktiengesellschaft lowered their target price on Microsoft from $630.00 to $575.00 and set a “buy” rating on the stock in a research note on Thursday, January 29th. Barclays reaffirmed an “overweight” rating and issued a $600.00 target price (down from $610.00) on shares of Microsoft in a research report on Thursday, January 29th. The Goldman Sachs Group cut their price target on Microsoft from $655.00 to $600.00 and set a “buy” rating for the company in a research note on Thursday, January 29th. Finally, Mizuho lowered their price target on Microsoft from $640.00 to $620.00 and set an “outperform” rating for the company in a research note on Wednesday, January 21st. Two equities research analysts have rated the stock with a Strong Buy rating, thirty-nine have issued a Buy rating and three have given a Hold rating to the stock. Based on data from MarketBeat, the company presently has an average rating of “Moderate Buy” and an average price target of $596.95.

Insiders Place Their Bets

In other Microsoft news, EVP Takeshi Numoto sold 2,850 shares of the business’s stock in a transaction on Thursday, December 4th. The shares were sold at an average price of $478.72, for a total value of $1,364,352.00. Following the sale, the executive vice president owned 55,782 shares of the company’s stock, valued at $26,703,959.04. The trade was a 4.86% decrease in their position. The sale was disclosed in a filing with the SEC, which can be accessed through this link. Also, 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 transaction, the chief executive officer owned 129,349 shares of the company’s stock, valued at approximately $63,577,620.48. This represents a 8.97% decrease in their position. The SEC filing for this sale provides additional information. 0.03% of the stock is owned by insiders.

Key Headlines Impacting Microsoft

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Analysts and notes highlighting Microsoft’s relatively durable free cash flow versus other hyperscalers are soothing investors worried about AI capex. Why Microsoft’s Cash Flow Sets It Apart from Other Hyperscalers
• Positive Sentiment: Microsoft’s large, funded partner programs (notably the multibillion‑dollar IREN deal) are progressing — IREN secured financing and management says Microsoft prepayments/backing reduce execution risk for deploying AI capacity. That validates Microsoft’s ability to source external infrastructure without bearing all capex. IREN Earnings Were Ugly—Is a Beautiful Future Already Funded?
• Positive Sentiment: Institutional flows show some buyers stepping in (reported stake increases by managers), suggesting bargain hunting after the pullback. Manning & Napier Advisors boosts Microsoft stake
• Positive Sentiment: Government partnerships (UK deepfake detection) reinforce Microsoft’s regulatory/trust positioning for AI tools — a reputational plus that can support enterprise adoption. Britain to work with Microsoft to build deepfake detection system
• Neutral Sentiment: Broader hyperscaler capex is surging (reports of ~$700B combined spending), a structural trend that supports long‑term AI revenue but puts near‑term pressure on free cash flow across the group. Tech AI spending may approach $700 billion this year, but the blow to cash raises red flags
• Neutral Sentiment: Infrastructure market evolution (bitcoin miners pivoting to lease power to AI customers) creates more supplier options for Microsoft to scale capacity without owning all sites — strategic but execution‑dependent. The Great Pivot: Bitcoin Miners Are Becoming AI’s Landlords
• Negative Sentiment: Stifel’s rare downgrade (Hold) and analyst concern about Google/Anthropic competition for Azure weighed on sentiment earlier this week and triggered part of the sell‑off. Microsoft Stock Gets a Rare Downgrade. AI Competition Is Heating Up for Azure.
• Negative Sentiment: Specific execution worries — slower Copilot adoption and signs of softer Azure acceleration in the quarter — remain key risk points investors are watching; these were central to the post‑earnings sell‑off. Microsoft (MSFT) Stock: Should You Buy After 22% Plunge?
• Negative Sentiment: Macro/market psychology: an AI‑led rotation has erased large amounts of Big Tech market value, amplifying volatility for Microsoft even when fundamentals look mixed. Big Tech sees over $1 trillion wiped from stocks as fears of AI bubble ignite sell-off

Institutional Investors Weigh In On Microsoft

A number of institutional investors have recently added to or reduced their stakes in the stock. AlphaQuest LLC lifted its holdings in Microsoft by 5.9% during the 2nd quarter. AlphaQuest LLC now owns 342 shares of the software giant’s stock valued at $170,000 after purchasing an additional 19 shares during the last quarter. BLVD Private Wealth LLC increased its holdings in shares of Microsoft by 0.6% during the third quarter. BLVD Private Wealth LLC now owns 3,169 shares of the software giant’s stock worth $1,641,000 after buying an additional 19 shares in the last quarter. Red Mountain Financial LLC increased its holdings in shares of Microsoft by 0.7% during the second quarter. Red Mountain Financial LLC now owns 2,761 shares of the software giant’s stock worth $1,373,000 after buying an additional 20 shares in the last quarter. Onyx Financial Advisors LLC raised its stake in shares of Microsoft by 0.3% in the second quarter. Onyx Financial Advisors LLC now owns 7,108 shares of the software giant’s stock valued at $3,536,000 after acquiring an additional 20 shares during the last quarter. Finally, Foundation Wealth Management LLC PA boosted its holdings in shares of Microsoft by 1.6% in the 2nd quarter. Foundation Wealth Management LLC PA now owns 1,276 shares of the software giant’s stock worth $635,000 after acquiring an additional 20 shares in the last quarter. 71.13% of the stock is owned by institutional investors and hedge funds.

Microsoft Stock Performance

The firm has a market capitalization of $2.98 trillion, a P/E ratio of 25.09, a price-to-earnings-growth ratio of 1.54 and a beta of 1.08. The stock has a 50-day moving average of $468.42 and a 200 day moving average of $496.24. The company has a debt-to-equity ratio of 0.09, a quick ratio of 1.38 and a current ratio of 1.39.

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

Microsoft Dividend Announcement

The business also recently declared a quarterly dividend, which will be paid on Thursday, March 12th. Investors of record on Thursday, February 19th will be given a dividend of $0.91 per share. The ex-dividend date is Thursday, February 19th. This represents a $3.64 annualized dividend and a yield of 0.9%. Microsoft’s dividend payout ratio is 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).