Microsoft Falls On Major Analyst Downgrade — What Is Retail’s Take On The Stock?

• Stifel cited Microsoft’s Azure supply issues as one of the reasons for the downgrade. 
• The analyst said that when combined with Google's strong cloud platform, Gemini results, and growing Anthropic momentum, a near-term Azure acceleration is unlikely, according to TheFly. 
• Retail sentiment on Stocktwits stayed at similar ‘extremely bullish’ levels since the company’s earnings results last week.

Shares of Microsoft Corp. (MSFT) slumped over 5% on Thursday after the company received a downgrade and price target cut from Stifel.

The analyst lowered the company’s outlook to ‘Hold’ from ‘Buy,’ and slashed its price target by about 27% to $392, down from $540.

However, retail investors on Stocktwits continued to remain ‘extremely bullish’ on the stock.

Analyst Rationale

Stifel cited Microsoft’s Azure supply issues as one of the reasons for the downgrade. The analyst said that those troubles, combined with Alphabet Inc. Google's (GOOGL) strong cloud platform, Gemini results, and growing Anthropic momentum indicate that a near-term Azure acceleration is unlikely, according to TheFly.

Stifel also said that in FY27, Microsoft is also likely to have less in-period revenue recognition compared to FY26 in line with several product cycles. The analyst noted that it is modeling its view on Microsoft based on 2027 EPS expectation of $18.70, which is below consensus. According to data from Fiscal.ai, the analyst consensus for Microsoft’s EPS in 2027 is at $18.88 based on 34 estimates, with the high-end expectation noted to be $20.27.

Earnings Update

Last week, Microsoft reported second-quarter (Q2) 2026 results that beat Wall Street consensus estimates, with quarterly revenues coming in 17% higher than the previous year at $81.3 billion, and above the street consensus of $80.25 billion as per data from Fiscal.ai. Earnings also beat market estimates.

However, the company posted a slight slowdown in Azure’s growth, with its cloud-computing unit reporting 38% sales growth in the latest quarter, down from 39% a year earlier. The company also said that it expects its Azure revenue growth in the third-quarter to be between 37% and 38% in constant currency.

How Are Stocktwits Users Reacting?

Retail sentiment on Stocktwits stayed at similar ‘extremely bullish’ levels since the company’s earnings results.

One bullish user waved off Anthropic announcements, saying that its I releases hardware impacting Microsoft is ‘laughable’ as the stock is tested and proven to be resilient.

Another user compared the stock to Apple Inc. (AAPL) shares and asked the market to not ‘underestimate this beast.’

A third bullish user said the market should aim for a $438 exit at least since the stock was oversold and way overdone to the downside.

Shares of MSFT have declined more than 4.75% in the past year.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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