Microsoft (NASDAQ:MSFT) Shares Down 10% After Analyst Downgrade

Microsoft Corporation (NASDAQ:MSFT) shares traded down 10% on Thursday after Wolfe Research lowered their price target on the stock from $625.00 to $530.00. Wolfe Research currently has an outperform rating on the stock. Microsoft traded as low as $421.02 and last traded at $433.50. 127,837,789 shares were traded during mid-day trading, an increase of 289% from the average session volume of 32,841,941 shares. The stock had previously closed at $481.63.

MSFT has been the subject of a number of other reports. DZ Bank reaffirmed a “buy” rating on shares of Microsoft in a research report on Thursday. UBS Group restated an “outperform” rating on shares of Microsoft in a report on Thursday. Robert W. Baird set a $540.00 target price on Microsoft and gave the stock an “outperform” rating in a report on Thursday. Barclays restated an “overweight” rating and set a $600.00 price target (down previously from $610.00) on shares of Microsoft in a research note on Thursday. Finally, Morgan Stanley reiterated an “overweight” rating on shares of Microsoft in a report on Thursday. One 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 company. Based on data from MarketBeat, Microsoft currently has a consensus rating of “Moderate Buy” and an average target price of $597.73.

Insider Activity at Microsoft

In related news, CEO Judson Althoff sold 12,750 shares of the business’s stock in a transaction dated 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 transaction, the chief executive officer directly owned 129,349 shares in the company, valued at approximately $63,577,620.48. The trade was a 8.97% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. Also, EVP Takeshi Numoto sold 2,850 shares of the company’s stock in a transaction dated Thursday, December 4th. The stock was sold at an average price of $478.72, for a total transaction of $1,364,352.00. Following the completion of the sale, the executive vice president directly owned 55,782 shares of the company’s stock, valued at $26,703,959.04. The trade was a 4.86% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Insiders have sold 54,100 shares of company stock valued at $27,598,872 over the last ninety days. Corporate insiders own 0.03% of the company’s stock.

Key Headlines Impacting Microsoft

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

Hedge Funds Weigh In On Microsoft

Several institutional investors have recently added to or reduced their stakes in the stock. Longfellow Investment Management Co. LLC lifted its position 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 worth $29,000 after acquiring an additional 20 shares in the last quarter. Westend Capital Management LLC raised its stake in shares of Microsoft by 386.7% during the 2nd quarter. Westend Capital Management LLC now owns 73 shares of the software giant’s stock valued at $36,000 after purchasing an additional 58 shares during the period. Bayforest Capital Ltd purchased a new stake in Microsoft during the 3rd quarter worth about $38,000. Fairway Wealth LLC boosted its stake 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 during the period. Finally, LSV Asset Management purchased a new position in Microsoft during the 4th quarter valued at about $44,000. Institutional investors own 71.13% of the company’s stock.

Microsoft Stock Performance

The stock has a market capitalization of $3.20 trillion, a P/E ratio of 26.91, a PEG ratio of 1.74 and a beta of 1.07. The company has a quick ratio of 1.39, a current ratio of 1.39 and a debt-to-equity ratio of 0.09. The company has a 50-day moving average price of $475.83 and a two-hundred day moving average price of $499.71.

Microsoft (NASDAQ:MSFT) last posted its earnings results on Wednesday, January 28th. The software giant reported $4.14 earnings per share for the quarter, topping analysts’ consensus estimates of $3.86 by $0.28. Microsoft had a net margin of 39.04% and a return on equity of 32.34%. The business had revenue of $81.27 billion for the quarter, compared to analyst estimates of $80.28 billion. During the same quarter in the prior year, the firm posted $3.23 EPS. Microsoft’s revenue was up 16.7% on a year-over-year basis. Equities analysts expect that Microsoft Corporation will post 13.08 earnings per share for the current year.

Microsoft Dividend Announcement

The firm also recently disclosed a quarterly dividend, which will be paid on Thursday, March 12th. Investors of record on Thursday, February 19th will be paid a dividend of $0.91 per share. The ex-dividend date of this dividend is Thursday, February 19th. This represents a $3.64 annualized dividend and a yield of 0.8%. Microsoft’s dividend payout ratio (DPR) is currently 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).