Street Reassesses Microsoft (MSFT) Amid Azure Growth and Capex Concerns

Core Viewpoint - Microsoft Corporation (NASDAQ:MSFT) is facing a cautious outlook from analysts, with Stifel downgrading its rating from Buy to Hold and reducing the price target by nearly 27% to $392 from $540, joining a small percentage of analysts with a negative view [1][2]. Group 1: Analyst Ratings and Expectations - Stifel analyst Brad Reback expressed concerns that consensus expectations for 2027 are overly optimistic, particularly regarding the growth of Microsoft's cloud business [2]. - The downgrade reflects worries about Azure's growth potential due to supply issues and competition from Google Cloud Platform (GCP) and Anthropic [2][3]. - Despite the downgrade, most analysts maintained their ratings, with some, like Philip Securities, upgrading to Buy, viewing the recent stock correction as a buying opportunity [5]. Group 2: Financial Performance and Market Reaction - Microsoft reported Q2 FY26 results showing a slowdown in cloud sales growth and increased capital expenditures, raising concerns among investors about the return on such spending [4]. - Following the earnings report, the stock has corrected by approximately 14% as of February 10, indicating market apprehension regarding its future performance [5]. - The consensus 1-year median price target suggests a potential upside of nearly 45%, indicating some analysts still see value in the stock despite current challenges [5]. Group 3: Company Overview - Microsoft is a global technology company that offers a diverse range of software, cloud services, devices, and business solutions, catering to both individual and enterprise customers [6].