Microsoft Stock Drops 5% Amid Analyst Downgrade and Software Industry Rout

Microsoft shares declined by 5% on Thursday due to a downgrade by analyst Brad Reback, who reduced the price target to $392 per share from $540. Reback believes analysts' projections for Microsoft's fiscal 2027 fundamentals are too high and cited operational tailwinds, including supply issues with the Azure cloud computing business and the increasing prominence of AI models. Despite the sell-off, Microsoft remains a powerful force on the market with numerous revenue streams to boost growth prospects.