Microsoft Stock Slumps as Azure 'Execution Issues' Make Analysts Wary

Key Takeaways

Microsoft ( MSFT ) shares tumbled Thursday after the company’s weaker-than-expected fiscal second-quarter cloud growth prompted some analysts to lower their price targets for the Magnificent Seven stock.

UBS maintained a “buy” rating but lowered its price target to $510 from $525, pinning the blame on Microsoft Azure, the tech giant's cloud computing platform. The company's projected current-quarter Azure growth was lower than hoped for, UBS analysts said.

"The near-term debate will be dominated by the 'what is going on with Azure?' question," they wrote, with its growth “far worse than we expected." Microsoft blamed the Azure disappointment on "execution issues" in the non- artificial intelligence segments of the segment, according to a conference call transcript provided by AlphaSense.

All but one of the 19 brokers with ratings tracked by Visible Alpha have a “buy” or equivalent rating on Microsoft's shares. Their consensus price target is about $516, a roughly 24% premium to Thursday's close, which followed a 6% daily drop.

Some analysts noted signs of AI optimism, including the news that Microsoft’s Azure AI Foundry—which customers can use to build custom AI apps—has reached more than 200,000 monthly users after two months.

Bank of America called Microsoft a “top pick," maintaining its $510 price target. The bank revised its 2025 earnings per share estimate upward, calling Microsoft “an AI winner in both apps and infrastructure.”

Morgan Stanley trimmed its price target to $530 from $540 and reiterated an "overweight" rating.

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