Microsoft Stock Lands Rare Downgrade After ‘Exceptional’ Quarter — But It Has Nothing To Do With Fundamentals: Retail’s Bullish

Microsoft Corp. (MSFT) has gained 10% over the two sessions since it reported its third-quarter results. 

Friday’s close of $435.28 meant Microsoft stock has turned positive for the year with a year-to-date gain of 3.5%.

Notwithstanding the investor optimism over the Satya Nadella-led company, an analyst downgraded the stock on Sunday. The Fly reported that research firm Phillip Securities downgraded the Microsoft stock to ‘Accumulate’ from ‘Buy’ but left the price target unchanged at $480.

The firm attributed the downgrade to the stock rally amid the recent market upturn and the company’s earnings.

Phillip Securities analysts, however, believe that Microsoft is strategically positioned to capitalize on the increasing demand for expensive artificial intelligence (AI) models, which in turn enhances the attractiveness of the Azure public cloud platform.

The firm also sees minimal impact from the Trump tariffs, given Microsoft’s strong enterprise customer base and the accent on its cloud service.

Microsoft stock is still trading off its all-time high of $467.70, hit on July 8, 2024.

Last Wednesday, Microsoft reported a solid third-quarter beat and issued positive guidance. The company also said it expects strong Azure revenue growth and a sequential increase in capital spending.

Following the results, Microsoft analysts hiked their price targets, with the new targets ranging from $475 to $550. Analysts called the quarter an “exceptional one.”

On Stocktwits, retail sentiment toward the Microsoft was 'extremely bullish' (93/100) by early Monday, with the message volume at 'extrmeley high' levels.

A retail investor called the stock as their “top stock pick” for May.

Another user, however, said they would wait for the stock to dip on Monday to add more of it.

On Stocktwits, retail sentiment toward Microsoft stock was ‘extremely bullish’ (93/100), with message volume at ‘extremely high’ levels. 

The Koyfin-compiled consensus price target for Microsoft stock is $505.76, implying an over 16% upside from Friday’s close.

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

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