Microsoft Stock: What’s Driving Recent Changes?
Microsoft’s stock has seen a decline following recent analyst adjustments. Stifel analysts have downgraded the company’s rating and reduced their price target significantly.
Stifel Lowers Microsoft’s Price Target
Analyst Brad Reback from Stifel has issued a pessimistic outlook for Microsoft, now rating the stock as a hold. The revised price target is set at $392, reflecting concerns about inflated market expectations for the company’s revenue and earnings.
Reasons for Downgrade
- Documented issues with Azure supply.
- Strong results from Google’s Gemini.
- Growing competition from Anthropic.
Financial Pressures Ahead
The revisions stem from forecasting revenue and earnings challenges anticipated in fiscal 2027. Stifel predicts capital expenditures will rise to approximately $200 billion, surpassing the previous market target of $160 billion.
Impact on Margins
These financial pressures are expected to constrain Microsoft’s gross margins. Reback has adjusted his fiscal 2027 gross margin predictions down to 63%, lower than the previous consensus estimate of 67%.
Competitive Landscape
The competitive environment is shifting. Reback does not foresee significant near-term acceleration in Azure. With Google’s Gemini achieving usage parity with OpenAI, and Anthropic making gains in enterprise solutions, Microsoft faces increased competition.
Stock Performance
As of Thursday, Microsoft shares have dropped by 2.58%, trading at $403.53. This places the stock around 17.5% above its 52-week low, but it has entered oversold territory with a relative strength index (RSI) of 29.4.
Trends Indicating Bearish Outlook
Microsoft shares are approximately 11.6% below their 20-day simple moving average (SMA) and 18.1% below the 100-day SMA, indicating a bearish trend for the short to medium term.
