Microsoft (NASDAQ:MSFT) Stock Falls 3.6% – Here’s What Happened

Microsoft Corporation (NASDAQ:MSFT)’s stock price fell 3.6% on Thursday. The stock traded as low as $532.68 and last traded at $535.93. Approximately 41,511,821 shares traded hands during trading, an increase of 24% from the average session volume of 33,513,797 shares. The stock had previously closed at $555.80.

Microsoft News Roundup

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Microsoft’s free-cash-flow position may offer some reassurance: an analysis notes that several other major AI hyperscalers are generating negative free cash flow, while Microsoft is generating positive cash flow. Is Microsoft Getting Enough Credit for Better Free Cash Flow Compared to its Peers?
• Neutral Sentiment: Reports say Microsoft plans to reduce the number of neocloud partners it uses, wind down rented AI capacity from Oracle, and declined a Texas data-center expansion with Nscale. This could help control costs and give Microsoft tighter oversight as it builds its own infrastructure, but the implications for capacity growth remain uncertain. Microsoft plans to use fewer neoclouds as AI buildout shows signs of strain
• Negative Sentiment: Investors may read the canceled or reduced AI-computing commitments as a sign that Microsoft is reassessing demand, project timing, or returns on its data-center spending. The shift comes as reports highlight construction delays and the rising cost of meeting a growing AI backlog, intensifying scrutiny of whether heavy investment will pay off. Microsoft is winding down Oracle deal to rent AI cloud capacity, Bloomberg News reports
• Negative Sentiment: Broader unease around AI spending and tech-market volatility may also weigh on MSFT, as investors question the scale of data-center investment relative to future cash returns. Microsoft and Oracle’s AI ambitions are suddenly a lot more expensive

Analyst Upgrades and Downgrades

Several research analysts have recently issued reports on the stock. Argus reduced their target price on shares of Microsoft from $620.00 to $510.00 and set a “buy” rating on the stock in a research note on Friday, July 10th. BNP Paribas Exane downgraded shares of Microsoft from a “strong-buy” rating to a “hold” rating in a research note on Monday, October 5th. Phillip Securities lowered shares of Microsoft from a “moderate buy” rating to a “hold” rating in a report on Monday, October 12th. Wolfe Research raised shares of Microsoft from a “hold” rating to a “strong-buy” rating in a research note on Thursday, October 29th. Finally, Piper Sandler reaffirmed an “overweight” rating and issued a $650.00 price objective (up from $610.00) on shares of Microsoft in a research note on Thursday, October 29th. One investment analyst has rated the stock with a Strong Buy rating, forty-six have issued a Buy rating and four have given a Hold rating to the company’s stock. According to data from MarketBeat, the stock presently has an average rating of “Moderate Buy” and a consensus price target of $609.54.

Microsoft Stock Performance

The company has a quick ratio of 1.21, a current ratio of 1.22 and a debt-to-equity ratio of 0.07. The stock has a market cap of $3.94 trillion, a P/E ratio of 27.69, a PEG ratio of 1.56 and a beta of 1.05. The stock has a fifty day simple moving average of $516.65 and a 200-day simple moving average of $440.18.

Microsoft (NASDAQ:MSFT) last announced its quarterly earnings results on Wednesday, October 28th. The software giant reported $4.89 EPS for the quarter, beating analysts’ consensus estimates of $4.72 by $0.17. The company had revenue of $92.28 billion during the quarter, compared to analysts’ expectations of $90.62 billion. Microsoft had a return on equity of 31.28% and a net margin of 41.17%. Microsoft’s revenue was up 18.8% on a year-over-year basis. During the same period in the prior year, the business posted $4.13 EPS. Equities analysts expect that Microsoft Corporation will post 19.89 earnings per share for the current fiscal year.

Microsoft Increases Dividend

The firm also recently announced a quarterly dividend, which will be paid on Thursday, December 10th. Shareholders of record on Thursday, November 19th will be issued a dividend of $0.98 per share. This is a boost from Microsoft’s previous quarterly dividend of $0.91. This represents a $3.92 annualized dividend and a yield of 0.7%. The ex-dividend date is Thursday, November 19th. Microsoft’s dividend payout ratio is presently 19.00%.

Insider Transactions at Microsoft

In other news, EVP Amy Hood sold 41,674 shares of Microsoft stock in a transaction dated Monday, September 14th. The stock was sold at an average price of $498.27, for a total transaction of $20,764,903.98. Following the transaction, the executive vice president owned 533,624 shares in the company, valued at $265,888,830.48. The trade was a 7.24% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Satya Nadella sold 86,525 shares of the business’s stock in a transaction that occurred on Tuesday, September 1st. The shares were sold at an average price of $501.46, for a total value of $43,388,826.50. Following the completion of the transaction, the chief executive officer owned 486,763 shares of the company’s stock, valued at $244,092,173.98. This represents a 15.09% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders sold 135,504 shares of company stock valued at $68,138,024. Insiders own 0.03% of the company’s stock.

Institutional Trading of Microsoft

Several hedge funds have recently bought and sold shares of the stock. Sullivan Wood Capital Management LLC raised its stake in Microsoft by 3.2% in the third quarter. Sullivan Wood Capital Management LLC now owns 647 shares of the software giant’s stock valued at $332,000 after buying an additional 20 shares during the period. Narus Financial Partners LLC boosted its stake in shares of Microsoft by 0.4% during the 3rd quarter. Narus Financial Partners LLC now owns 4,487 shares of the software giant’s stock worth $2,301,000 after acquiring an additional 20 shares during the period. Box Hill Private Wealth LLC boosted its stake in shares of Microsoft by 0.5% during the 2nd quarter. Box Hill Private Wealth LLC now owns 4,272 shares of the software giant’s stock worth $1,593,000 after acquiring an additional 21 shares during the period. PMG Family Office LLC increased its holdings in shares of Microsoft by 1.0% during the 3rd quarter. PMG Family Office LLC now owns 2,063 shares of the software giant’s stock worth $1,058,000 after acquiring an additional 21 shares during the last quarter. Finally, Dynamic Financial Group increased its holdings in shares of Microsoft by 1.5% during the 3rd quarter. Dynamic Financial Group now owns 1,439 shares of the software giant’s stock worth $738,000 after acquiring an additional 21 shares during the last quarter. 71.13% of the stock is currently owned by institutional investors and hedge funds.

Microsoft Company Profile

Microsoft Corporation is a global technology company that develops software, cloud services, devices, and digital solutions for consumers, businesses, and public-sector organizations. Founded in 1975 by Bill Gates and Paul Allen, the company is headquartered in Redmond, Washington.

Its products and services include the Windows operating system, Microsoft 365 productivity applications, Azure cloud computing, LinkedIn, GitHub, Surface devices, and Xbox gaming products and services. Microsoft also provides business software, cybersecurity tools, and artificial intelligence technologies.

Microsoft serves customers around the world through its products, online platforms, and network of business partners.