Shares of Microsoft (NASDAQ:MSFT) are dipping Thursday after Stifel analysts downgraded the stock and revised their price target lower.
Stifel Lowers Price Target To $392
In a pessimistic note, analyst Brad Reback downgraded Microsoft to a hold rating and lowered the price target to $392. He said the market’s expectations for full-year revenue and earnings-per-share were too optimistic given well-documented Azure supply issues, Google’s strong Gemini results and growing Anthropic momentum.
Financial Headwinds and Investment Implications
This adjustment stems from anticipated revenue and earnings pressures in fiscal 2027, alongside significant increases in capital expenditures projected at around $200 billion, which is well above the market’s $160 billion target.
Reback said these conditions are likely to constrain Microsoft’s gross margins, further impacted by aggressive spending on AI research and development. He lowered his fiscal 2027 gross margins expectations to 63% versus the 67% consensus, saying the company is entering a new spending phase despite discipline in the past.
Competitive Landscape Narrowing
Reback believes near-term Azure acceleration is unlikely with Google’s Gemini reaching usage parity with OpenAI and with Anthropic “making strides” on the enterprise side. He added that Microsoft’s relationship with OpenAI is not as additive as before.
Shares Dip Below Key Levels
MSFT Price Action: Microsoft shares are trading down 2.58% at $403.53 at the time of publication on Thursday. The stock is sitting about 17.5% above its 52-week low, and has an RSI of 29.4, indicating it has entered oversold conditions.
Microsoft is trading approximately 11.6% below its 20-day simple moving average (SMA) and 18.1% below its 100-day SMA, indicating a bearish trend in the short to medium term.
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