Microsoft (NASDAQ:MSFT) Shares Down 2.2% – Should You Sell?

Microsoft Corporation (NASDAQ:MSFT) traded down 2.2% during trading on Thursday . The stock traded as low as $377.39 and last traded at $381.58. Approximately 30,199,237 shares traded hands during mid-day trading, a decline of 19% from the average session volume of 37,203,578 shares. The stock had previously closed at $390.34.

Key Stories Impacting Microsoft

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Microsoft expanded its long-term partnership with Databricks, deepening Azure integrations and strengthening its cloud/AI ecosystem across Microsoft 365, Teams, and Copilot. Microsoft (MSFT) Expands Partnership with AI Firm Databricks
• Positive Sentiment: Analysts and bulls continue to argue that Microsoft remains undervalued after its pullback, with several notes pointing to healthy demand, strong Azure growth potential, and upside if AI monetization stays on track. Analysts Say Microsoft Stock is Deeply Undervalued Ahead of Q4 Earnings
• Positive Sentiment: Microsoft also announced additional AI-related initiatives, including support for the Department of Energy’s “Genesis Mission” and other marketplace and infrastructure partnerships, reinforcing its long-term AI platform strategy. Microsoft commits $60M to ‘Genesis Mission’ to help power Dept. of Energy’s AI-for-science push
• Neutral Sentiment: Microsoft is also making strategic moves in cloud gaming and security, but these stories appear more incremental than immediately stock-moving. Amazon and Microsoft pivot cloud gaming strategies to target different players
• Negative Sentiment: The biggest headwind remains investor concern that Microsoft’s massive AI capital expenditures could pressure margins and overshadow otherwise solid earnings, especially if management does not reassure the market on spending discipline. Microsoft Earnings Preview: Get Ready for Soaring AI Spending to Sink MSFT Stock
• Negative Sentiment: There is also ongoing legal overhang from class action and investor-alert headlines tied to alleged securities issues, which adds another source of sentiment drag. Investor Alert: Pomerantz Law Firm Reminds Investors… – MSFT

Wall Street Analysts Forecast Growth

A number of research firms have issued reports on MSFT. Raymond James Financial cut shares of Microsoft from a “market perform” rating to a “market perform” rating in a research note on Tuesday, May 5th. Rothschild & Co Redburn dropped their price target on shares of Microsoft from $450.00 to $400.00 and set a “neutral” rating on the stock in a research note on Thursday, April 23rd. Royal Bank Of Canada restated a “buy” rating on shares of Microsoft in a report on Friday, May 22nd. Robert W. Baird reduced their price objective on shares of Microsoft from $540.00 to $500.00 and set an “outperform” rating for the company in a research note on Wednesday, April 15th. Finally, DA Davidson reissued a “buy” rating and set a $550.00 target price on shares of Microsoft in a research report on Monday, July 6th. Forty-three research analysts have rated the stock with a Buy rating and six have issued a Hold rating to the company’s stock. Based on data from MarketBeat, Microsoft presently has an average rating of “Moderate Buy” and a consensus target price of $556.37.

Microsoft Stock Performance

The company has a market cap of $2.83 trillion, a P/E ratio of 22.71, a P/E/G ratio of 1.22 and a beta of 1.13. The firm’s fifty day moving average price is $399.57 and its 200-day moving average price is $408.91. The company has a current ratio of 1.28, a quick ratio of 1.27 and a debt-to-equity ratio of 0.08.

Microsoft (NASDAQ:MSFT) last posted its quarterly earnings results on Wednesday, April 29th. The software giant reported $4.27 earnings per share (EPS) for the quarter, topping the consensus estimate of $4.06 by $0.21. Microsoft had a net margin of 39.34% and a return on equity of 31.94%. The firm had revenue of $82.89 billion during the quarter, compared to analyst estimates of $81.44 billion. During the same quarter in the prior year, the business posted $3.46 earnings per share. The company’s quarterly revenue was up 18.3% compared to the same quarter last year. As a group, research analysts forecast that Microsoft Corporation will post 16.71 EPS for the current fiscal year.

Microsoft Dividend Announcement

The firm also recently disclosed a quarterly dividend, which will be paid on Thursday, September 10th. Shareholders of record on Thursday, August 20th will be paid a $0.91 dividend. The ex-dividend date of this dividend is Thursday, August 20th. This represents a $3.64 dividend on an annualized basis and a yield of 1.0%. Microsoft’s dividend payout ratio (DPR) is presently 21.67%.

Insider Activity at Microsoft

In other Microsoft news, CEO Judson Althoff sold 15,500 shares of Microsoft stock in a transaction dated Monday, June 1st. The stock was sold at an average price of $460.99, for a total transaction of $7,145,345.00. Following the transaction, the chief executive officer directly owned 110,477 shares in the company, valued at approximately $50,928,792.23. The trade was a 12.30% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is accessible through this link. Also, EVP Amy Coleman sold 1,262 shares of the business’s stock in a transaction dated Thursday, May 14th. The shares were sold at an average price of $411.34, for a total value of $519,111.08. Following the completion of the transaction, the executive vice president directly owned 46,003 shares of the company’s stock, valued at approximately $18,922,874.02. The trade was a 2.67% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Insiders have sold 23,762 shares of company stock worth $10,508,361 in the last ninety days. Company insiders own 0.03% of the company’s stock.

Institutional Trading of Microsoft

A number of large investors have recently bought and sold shares of the business. Longfellow Investment Management Co. LLC boosted its stake in shares of Microsoft by 51.3% during the second quarter. Longfellow Investment Management Co. LLC now owns 59 shares of the software giant’s stock valued at $29,000 after purchasing an additional 20 shares during the period. Shepherd Kaplan Krochuk LLC raised its holdings in Microsoft by 4.9% during the 3rd quarter. Shepherd Kaplan Krochuk LLC now owns 431 shares of the software giant’s stock valued at $223,000 after buying an additional 20 shares during the last quarter. Better Money Decisions LLC boosted its position in Microsoft by 0.6% during the 2nd quarter. Better Money Decisions LLC now owns 3,498 shares of the software giant’s stock valued at $1,740,000 after buying an additional 21 shares during the period. Endowment Wealth Management Inc. increased its position in shares of Microsoft by 0.4% in the third quarter. Endowment Wealth Management Inc. now owns 5,251 shares of the software giant’s stock valued at $2,720,000 after acquiring an additional 21 shares during the period. Finally, Pollock Investment Advisors LLC increased its position in shares of Microsoft by 0.8% in the third quarter. Pollock Investment Advisors LLC now owns 2,805 shares of the software giant’s stock valued at $1,453,000 after acquiring an additional 21 shares during the period. 71.13% of the stock is owned by institutional investors.

About Microsoft

Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.

Microsoft’s product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).