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

Microsoft Corporation (NASDAQ:MSFT) gapped down prior to trading on Thursday after Scotiabank lowered their price target on the stock from $650.00 to $600.00. The stock had previously closed at $481.63, but opened at $439.99. Scotiabank currently has a sector 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 equities analysts have also issued reports on MSFT. JPMorgan Chase & Co. decreased their target price on shares of Microsoft from $575.00 to $550.00 and set an “overweight” rating for the company in a research report on Thursday. DA Davidson reiterated a “buy” rating and issued a $650.00 target price on shares of Microsoft in a research note on Thursday, December 4th. Redburn Partners set a $450.00 target price on shares of Microsoft in a research note on Wednesday, January 21st. Bank of America cut their price target on shares of Microsoft from $640.00 to $520.00 and set a “buy” rating for the company in a research note on Monday. Finally, Wolfe Research dropped their price target on Microsoft from $675.00 to $625.00 and set an “outperform” rating for the company in a report on Monday, December 15th. One research analyst has rated the stock with a Strong Buy rating, thirty-eight have assigned a Buy rating and three have assigned a Hold rating to the stock. Based on data from MarketBeat, the stock presently has an average rating of “Moderate Buy” and an average target price of $597.41.

Insider Buying and Selling at Microsoft

In other news, CEO Judson Althoff sold 12,750 shares of Microsoft 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 of the company’s stock, valued at approximately $63,577,620.48. The trade was a 8.97% decrease in their position. The transaction was disclosed in a legal filing with the SEC, which is accessible through this link. Also, insider Bradford L. Smith sold 38,500 shares of Microsoft stock in a transaction dated Monday, November 3rd. The stock was sold at an average price of $518.64, for a total value of $19,967,640.00. Following the completion of the transaction, the insider owned 461,597 shares in the company, valued at approximately $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. Over the last three months, insiders have sold 54,100 shares of company stock valued at $27,598,872. 0.03% of the stock is currently owned by company insiders.

More Microsoft News

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Beat on top and bottom line; Microsoft Cloud topped $50B and Azure still grew strongly (39% YoY), showing continued AI-driven revenue expansion. Microsoft beats Wall Street expectations
• Positive Sentiment: OpenAI is already contributing material dollars to Microsoft’s P&L and backlog (reported gains and contracts), giving MSFT exposure to the fastest-growing AI applications market. Microsoft gained $7.6 billion from OpenAI last quarter
• Neutral Sentiment: Reports that Microsoft, Nvidia and Amazon are in talks to invest heavily in OpenAI could support long‑term strategic positioning — but terms, dilution and timing remain uncertain. Nvidia, Microsoft, Amazon lead up to $100B OpenAI investment: report
• Neutral Sentiment: Several firms reiterated buy/outperform ratings even as they trimmed price targets — signaling long‑term conviction tempered by nearer‑term margin/capex risk. Analysts maintain buy ratings despite near-term concerns
• Negative Sentiment: Record capex: Microsoft disclosed roughly $37.5B of AI infrastructure spending in the quarter — investors worry this heavy, front‑loaded capex will pressure free cash flow and may not translate to near‑term margin improvement. Microsoft drops after reporting record spending on AI hardware
• Negative Sentiment: Concentration and margin risk: analysts and commentary flag a large share of contracted backlog/RPO tied to OpenAI plus a shift toward lower‑margin hardware (GPUs) and long depreciation schedules — potential for margin compression and higher ongoing capex needs. Microsoft Q2: Non‑Obvious Risks Hiding Behind The AI Boom
• Negative Sentiment: Immediate market reaction: despite the beat, investors sold on the combination of moderating Azure growth, elevated capex and several downgraded/trimmed price targets — prompting steep post‑earnings downside. Microsoft shows gain on OpenAI investment after restructuring as cloud growth slows

Institutional Investors Weigh In On Microsoft

Hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. AlphaQuest LLC increased its holdings in shares of Microsoft by 5.9% in the second quarter. AlphaQuest LLC now owns 342 shares of the software giant’s stock valued at $170,000 after buying an additional 19 shares in the last quarter. BLVD Private Wealth LLC increased its holdings in Microsoft by 0.6% in the 3rd quarter. BLVD Private Wealth LLC now owns 3,169 shares of the software giant’s stock valued at $1,641,000 after buying an additional 19 shares during the period. Seek First Inc. raised its stake in Microsoft by 1.5% during the second quarter. Seek First Inc. now owns 1,358 shares of the software giant’s stock worth $675,000 after acquiring an additional 20 shares in the last quarter. Level Financial Advisors grew its holdings in shares of Microsoft by 0.8% during the second quarter. Level Financial Advisors now owns 2,680 shares of the software giant’s stock worth $1,333,000 after purchasing an additional 20 shares during the last quarter. Finally, Red Mountain Financial LLC boosted its position in Microsoft by 0.7% in the 2nd quarter. Red Mountain Financial LLC now owns 2,761 shares of the software giant’s stock valued at $1,373,000 after buying an additional 20 shares during the last quarter. 71.13% of the stock is currently owned by hedge funds and other institutional investors.

Microsoft Stock Down 12.3%

The company has a current ratio of 1.40, a quick ratio of 1.39 and a debt-to-equity ratio of 0.10. The stock has a market cap of $3.14 trillion, a price-to-earnings ratio of 30.05, a price-to-earnings-growth ratio of 1.94 and a beta of 1.07. The business’s fifty day simple moving average is $477.57 and its 200 day simple moving average is $500.68.

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, topping the consensus estimate of $3.86 by $0.28. The company had revenue of $81.27 billion during the quarter, compared to the consensus estimate of $80.28 billion. Microsoft had a net margin of 35.71% and a return on equity of 32.45%. The firm’s revenue was up 16.7% compared to the same quarter last year. During the same quarter in the prior year, the firm earned $3.23 earnings per share. Equities analysts forecast that Microsoft Corporation will post 13.08 earnings per share for the current fiscal year.

Microsoft Announces Dividend

The company 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. The ex-dividend date is Thursday, February 19th. This represents a $3.64 annualized dividend and a yield of 0.9%. Microsoft’s payout ratio is presently 25.89%.

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).