Microsoft shares fall as analysts trim price targets

Microsoft shares fell 1.5% on Friday on the Nasdaq after several analysts trimmed price targets ahead of the company’s fiscal fourth-quarter earnings report, with investors focused on artificial intelligence spending and large capital outlays.

The stock has declined more than 20% in 2026 and nearly 23% over the past year, even as Microsoft continued investing in AI infrastructure and Azure cloud services.

Several brokerages adjusted valuations while keeping mostly positive ratings. Citi reduced its price target to $570 from $620 and maintained a Buy rating, noting the lower target reflected broader valuation pressure across software names rather than a clear change in company fundamentals. Mizuho analyst Gregg Moskowitz lowered his target to $490 from $515 and wrote that ‘SaaS (software-as-a-service) continues to be resilient, although multiples continue to be plagued by investor concerns about AI-led disruption.’ Wells Fargo cut its target to $625 from $650 and kept an Overweight rating, while Evercore ISI raised its target to $525 from $510 and maintained an Outperform rating.

Investors have focused on the scale of Microsoft’s AI-related spending. The company reported capital expenditures of $30.88 billion in its fiscal third quarter, up 84.4% from a year earlier. Estimates place Microsoft’s total fiscal 2026 capital spending near $190 billion as the company builds data centers and expands Azure computing capacity. That level of spending has weighed on operating margins and free cash flow.

A mid-year CIO survey pointed to strong IT budget growth in 2026, which supports demand for cloud and AI services. Market participants will watch whether Microsoft can convert enterprise demand into larger market share and stronger financial returns.

Microsoft is scheduled to report fiscal fourth-quarter results after the market close on July 29. Consensus forecasts call for earnings of $4.24 per share on revenue of $86.66 billion. Analysts say Azure growth, operating margin guidance and capital expenditure plans for fiscal 2027 will be the primary areas of focus in the earnings release.