Microsoft Stock Faces Downgrade
Microsoft (NASDAQ: MSFT) shares declined by 2.5% to below $357 following a downgrade from Stifel analyst Brad Reback, who set a price target of $400 and maintained a “hold” rating. Reback’s caution is based on anticipated disappointing earnings, with a forecast of $4.24 per share for the upcoming report on July 29, reflecting a 16% year-over-year increase but overshadowed by concerns about compressing margins in Microsoft’s Azure cloud business.
Reback predicts a 4.5 percentage point decline in gross margins to 63% by fiscal 2027, missing consensus estimates by at least 300 basis points. The report expressed worries over cash flow growth, pointing to heavy capital spending on artificial intelligence, which has resulted in stagnant free cash flow over the last two years.
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