icon
icon
icon
icon
🏷️$300 Off
🏷️$300 Off

News /

Articles /

Morgan Stanley Cuts Microsoft Target Price 11% Amid Demand Concerns

Market IntelThursday, Apr 17, 2025 6:01 am ET
1min read

Morgan Stanley has lowered its target price for microsoft corporation (MSFT.US) from $530 to $472, while keeping its "overweight" rating. This adjustment is due to ongoing demand concerns and negative investor sentiment, which have led to a downward revision of market expectations for Microsoft's performance. Despite these short-term challenges, morgan stanley continues to view microsoft as a long-term winner in the generative artificial intelligence (GenAI) sector, citing its attractive valuation.

The firm's report highlights significant macroeconomic uncertainty, which has prompted a reduction in Microsoft's performance forecasts. Specifically, Morgan Stanley has lowered its estimates for Azure's year-over-year growth for the third and fourth quarters from 31.5% and 32% to 31% and 30%, respectively. Additionally, the growth estimates for Microsoft 365 commercial cloud services have been reduced from 14% and 13% to 13.5% and 12% for the same periods. This marks the second consecutive downward revision, reflecting the macroeconomic uncertainties and mixed survey results.

Morgan Stanley acknowledges that short-term demand headwinds have dominated investor discussions but have not yet fully materialized in market consensus. The firm anticipates that near-term market expectations for Microsoft will be adjusted downward. However, Morgan Stanley remains confident in Microsoft's overall positioning, suggesting that its stock price may be nearing a valuation bottom, offering an attractive long-term risk-reward profile.

According to Morgan Stanley's Chief Information Officer (CIO) survey, Microsoft's leadership in the GenAI sector remains relatively unchanged. Thirty-five percent of CIOs expect Microsoft to capture the largest incremental market share by 2025. Among the 30% of CIOs who have not yet started deploying AI projects, there is a preference for leveraging large-scale cloud service providers like AWS, Azure, and GCP. In emerging fields such as AI agents, Microsoft is widely recognized for its strategic advantage, particularly with Microsoft 365 Copilot, which lays the groundwork for future agent-based workflows.

Furthermore, Morgan Stanley believes that Microsoft is well-positioned within its investment cycle. Based on management comments and the firm's analysis, Microsoft's capital expenditures may decrease, potentially driving free cash flow growth to exceed expectations. For every 1% reduction in capital expenditures, free cash flow is estimated to increase by approximately 1.5%.

Comments

Add a public comment...
Post
User avatar and name identifying the post author
orangewyd
04/17
$MSFT no one's buying it acts like a penny stock
0
Reply
User avatar and name identifying the post author
ButlerWithaJumper
04/17
$MSFT trap
0
Reply
User avatar and name identifying the post author
Intelligent-Snow-930
04/17
@ButlerWithaJumper Think MSFT's bottom near?
0
Reply
User avatar and name identifying the post author
rareinvoices
04/17
Holding MSFT long, trust in their strategy
0
Reply
User avatar and name identifying the post author
smarglebloppitydo
04/17
Microsoft's AI game is strong, but demand concerns hit hard. Long-term hold for me, gotta ride the wave.
0
Reply
User avatar and name identifying the post author
StephCurryInTheHouse
04/17
@smarglebloppitydo How long you planning to hold MSFT? You thinking years or just riding the current dip?
0
Reply
User avatar and name identifying the post author
nrthrnbr
04/17
MSFT undervalued, buying opportunity or what? 🤔
0
Reply
User avatar and name identifying the post author
Turbonik1
04/17
@nrthrnbr I had MSFT, sold early. Regretting now, FOMO hitting hard.
0
Reply
User avatar and name identifying the post author
DoU92
04/17
@nrthrnbr How long u holding MSFT? Got a target price in mind?
0
Reply
User avatar and name identifying the post author
goldeneye700
04/17
Azure growth slowdown, but still a beast
0
Reply
User avatar and name identifying the post author
Empty_Somewhere_2135
04/17
AI agents, future is bright for $MSFT
0
Reply
User avatar and name identifying the post author
AlmightyAntwan12
04/17
@Empty_Somewhere_2135 Agreed, MSFT's future looks solid.
0
Reply
User avatar and name identifying the post author
petree28
04/17
@Empty_Somewhere_2135 What about AI's impact on earnings?
0
Reply
User avatar and name identifying the post author
vaxop
04/17
Generative AI = long-term win for Microsoft
0
Reply
User avatar and name identifying the post author
p_m_a
04/17
@vaxop AI's long-term gains might offset current dips.
0
Reply
User avatar and name identifying the post author
mtrosejibber
04/17
@vaxop Not so sure, demand concerns linger.
0
Reply
User avatar and name identifying the post author
Traditional_Wave8524
04/17
Valuation bottom near? Time to load up
0
Reply
User avatar and name identifying the post author
Booknerdworm
04/17
Microsoft's GenAI lead is solid; just need patience through these demand clouds. Long-term, it's a no-brainer.
0
Reply
User avatar and name identifying the post author
Wonderful_Touch5652
04/17
Wow!MS demonstrated textbook-perfect bottom and peak confirmation signals via Peak Seeker framework,with subsequent price movements validating 83.6% predictive accuracy
0
Reply
User avatar and name identifying the post author
NRG1788
04/17
@Wonderful_Touch5652 How accurate have your other predictions been?
0
Reply
User avatar and name identifying the post author
chrisdelaris
04/17
@Wonderful_Touch5652 Sweet validation, bro.
0
Reply
Disclaimer: The news articles available on this platform are generated in whole or in part by artificial intelligence and may not have been reviewed or fact checked by human editors. While we make reasonable efforts to ensure the quality and accuracy of the content, we make no representations or warranties, express or implied, as to the truthfulness, reliability, completeness, or timeliness of any information provided. It is your sole responsibility to independently verify any facts, statements, or claims prior to acting upon them. Ainvest Fintech Inc expressly disclaims all liability for any loss, damage, or harm arising from the use of or reliance on AI-generated content, including but not limited to direct, indirect, incidental, or consequential damages.
You Can Understand News Better with AI.
Whats the News impact on stock market?
Its impact is
fork
logo
AInvest
Aime Coplilot
Invest Smarter With AI Power.
Open App