Microsoft (NASDAQ:MSFT) Trading Down 10% Following Analyst Downgrade

Microsoft Corporation (NASDAQ:MSFT) fell 10% on Thursday after Scotiabank lowered their price target on the stock from $650.00 to $600.00. Scotiabank currently has a sector 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 topic of a number of other research reports. Piper Sandler reaffirmed an “overweight” rating and set a $600.00 price target (down previously from $650.00) on shares of Microsoft in a report on Thursday. Arete Research lifted their target price on Microsoft from $710.00 to $730.00 in a research note on Monday, October 27th. Jefferies Financial Group reissued a “buy” rating on shares of Microsoft in a research note on Thursday, January 22nd. Guggenheim restated a “buy” rating and set a $586.00 price objective on shares of Microsoft in a research report on Thursday, January 22nd. Finally, Wells Fargo & Company reduced their price objective on shares of Microsoft from $630.00 to $615.00 and set an “overweight” rating on the stock in a research report on Thursday. One research analyst has rated the stock with a Strong Buy rating, thirty-eight have issued a Buy rating and three have assigned a Hold rating to the company. According to data from MarketBeat.com, the stock presently has a consensus rating of “Moderate Buy” and an average target price of $599.72.

Insider Activity at Microsoft

In other Microsoft news, EVP Takeshi Numoto sold 2,850 shares of the stock in a transaction dated Thursday, December 4th. The stock was sold at an average price of $478.72, for a total value of $1,364,352.00. Following the completion of the sale, the executive vice president directly owned 55,782 shares in the company, valued at approximately $26,703,959.04. This trade represents a 4.86% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which can be accessed through the SEC website. Also, insider Bradford L. Smith sold 38,500 shares of the firm’s 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 sale, the insider directly owned 461,597 shares of the company’s stock, 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. Insiders have sold 54,100 shares of company stock valued at $27,598,872 in the last ninety days. Corporate insiders own 0.03% of the company’s stock.

Trending Headlines about Microsoft

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Company beat expectations on top and bottom lines (Q2 EPS $4.14; revenue $81.27B), showing continued revenue momentum in cloud and AI-driven services. MarketBeat: Microsoft beats Wall Street expectations
• Positive Sentiment: Azure and cloud remain growth engines (Azure growth still ~39% YoY) and Microsoft recognized meaningful revenue from OpenAI partnerships — signaling durable multi-year opportunity if monetization continues. TechCrunch: Microsoft gained $7.6B from OpenAI
• Positive Sentiment: Numerous analysts continue to rate MSFT as a buy/outperform and some firms reaffirm high price targets (DA Davidson $650 PT), suggesting Wall Street still sees meaningful upside despite the sell-off. TickerReport: DA Davidson reaffirmation
• Neutral Sentiment: Microsoft disclosed very large AI infrastructure capex this quarter; the move is strategically consistent with peers but timing of returns remains uncertain — a long?term growth bet rather than an immediate earnings boost.
• Neutral Sentiment: There are reports of large, industry?level funding talks for OpenAI (participants include Microsoft, Nvidia, Amazon) — potentially positive for future revenue but not an immediate cure for near?term margin concerns. Reuters: Invest talks for OpenAI
• Negative Sentiment: CapEx soared (reported ~$37.5B), raising investor worry that heavy short?term spending on GPUs and data centers will weigh on free cash flow and margins until monetization accelerates. FinancialPost: Record AI spending
• Negative Sentiment: Azure growth, while large in absolute terms, showed signs of moderation versus prior quarters — that subtle slowdown was enough to spook investors who want clearer near?term payback from AI investments. FT: AI spending spooks investors
• Negative Sentiment: Following the release, multiple firms trimmed price targets and the stock experienced one of its largest single?day drops in years—fueling a sector?wide risk?off move that amplified the decline. Reuters: Shares fall after results

Institutional Trading of Microsoft

A number of institutional investors and hedge funds have recently added to or reduced their stakes in the company. WFA Asset Management Corp grew its holdings in Microsoft by 27.0% during the first quarter. WFA Asset Management Corp now owns 1,016 shares of the software giant’s stock worth $427,000 after acquiring an additional 216 shares during the period. Ironwood Wealth Management LLC. raised its stake in shares of Microsoft by 0.3% during the 2nd quarter. Ironwood Wealth Management LLC. now owns 12,658 shares of the software giant’s stock worth $5,658,000 after buying an additional 38 shares during the period. Discipline Wealth Solutions LLC lifted its position in shares of Microsoft by 410.4% during the 3rd quarter. Discipline Wealth Solutions LLC now owns 2,659 shares of the software giant’s stock valued at $1,144,000 after buying an additional 2,138 shares in the last quarter. Wealth Group Ltd. grew its position in shares of Microsoft by 1.2% in the fourth quarter. Wealth Group Ltd. now owns 2,374 shares of the software giant’s stock valued at $1,000,000 after purchasing an additional 28 shares during the period. Finally, Eagle Capital Management LLC increased its stake in shares of Microsoft by 0.4% during the fourth quarter. Eagle Capital Management LLC now owns 23,097 shares of the software giant’s stock worth $9,735,000 after purchasing an additional 96 shares in the last quarter. Institutional investors and hedge funds own 71.13% of the company’s stock.

Microsoft Stock Performance

The stock has a market cap of $3.22 trillion, a price-to-earnings ratio of 30.83, a P/E/G ratio of 1.94 and a beta of 1.07. The firm’s 50-day moving average is $477.57 and its two-hundred day moving average is $500.68. The company has a current ratio of 1.40, a quick ratio of 1.39 and a debt-to-equity ratio of 0.10.

Microsoft (NASDAQ:MSFT) last announced its quarterly earnings data on Wednesday, January 28th. The software giant reported $4.14 earnings per share for the quarter, beating analysts’ consensus estimates of $3.86 by $0.28. Microsoft had a return on equity of 32.45% and a net margin of 35.71%.The company had revenue of $81.27 billion for the quarter, compared to analyst estimates of $80.28 billion. During the same quarter last year, the firm posted $3.23 EPS. The firm’s revenue for the quarter was up 16.7% on a year-over-year basis. As a group, sell-side analysts expect that Microsoft Corporation will post 13.08 earnings per share for the current year.

Microsoft Dividend Announcement

The firm also recently announced a quarterly dividend, which will be paid on Thursday, March 12th. Shareholders of record on Thursday, February 19th will be paid a $0.91 dividend. This represents a $3.64 dividend on an annualized basis and a yield of 0.8%. The ex-dividend date of this dividend is Thursday, February 19th. Microsoft’s dividend payout ratio (DPR) is 25.89%.

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).