New York, Jan 22, 2026, 16:57 EST
- Microsoft shares dropped following Rothschild & Co Redburn’s decision to cut its price target while maintaining a neutral rating
- Analysts remain largely upbeat ahead of Microsoft’s fiscal Q2 results on Jan. 28, though price targets are adjusting
- With the next catalyst approaching, investors are zeroing in on Azure growth and AI spending.
Microsoft shares dropped Wednesday after Rothschild & Co Redburn lowered its price target to $450 from $500, keeping a neutral stance on the stock. The downgrade sent shares down roughly 2.3% during mid-day trading. Prices dipped as low as $438.68 before settling at $444.11, with volume about 45% above average. 1
The decline arrives just days ahead of Microsoft’s fiscal second-quarter earnings report on Jan. 28. Investors will closely watch demand trends in Azure and gauge the company’s AI investment levels. Wall Street expects earnings per share of $3.92 on revenue near $80.28 billion, according to TipRanks. 2
Cowen analyst Derrick Wood noted that Microsoft’s data looks solid but warned the stock might “remain range-bound” until Azure growth picks up noticeably. He forecasts 37% Azure growth in constant currency and highlighted earlier concerns about capacity limits. According to his firm’s enterprise survey, Microsoft leads AI spending plans, beating both Google Cloud (GCP) and Amazon Web Services (AWS), TipRanks reported. 3
Despite the recent slip, a few brokerages are still revising estimates downward rather than pulling back completely. Wells Fargo lowered its Microsoft price target to $630 from $665 on Thursday but maintained its “overweight” rating, according to MarketBeat. MarketBeat data shows the average price target hovers around $623, with most analysts sticking to buy ratings. 4
Other firms remained firmly bullish. Evercore ISI’s Kirk Materne stuck with a Buy rating and a $640 price target, while TD Cowen held its Buy call, targeting $625, TipRanks reported. For the quarter ending Sept. 30, Microsoft recorded $77.67 billion in revenue and a net profit of $27.75 billion, according to the same source. 5
Institutional flows remain mixed on Microsoft. Greenspring Advisors added a fresh stake in the stock during Q3, snapping up 7,031 shares worth roughly $3.64 million, a filing reported by MarketBeat shows. The same report flagged Microsoft’s quarterly dividend of $0.91 per share, set to pay out on March 12, along with insider selling activity over the last quarter. 6
Price targets don’t predict where a stock will land next week. Instead, they serve as a quick gauge of analysts’ confidence in growth, margins, and valuation over the coming year.
That said, the earnings report could swing either way. Should Azure’s growth remain limited by capacity issues, or if AI-driven expenses outpace revenue gains, the stock might falter despite largely “buy” ratings.
Microsoft’s strategy also hinges on competition. Cloud spending is concentrated among a handful of major players, so any move toward AWS or Google’s cloud platforms would likely surface first in customer feedback, then appear in quarterly earnings forecasts.
Right now, the story is straightforward: a downgrade hit the shares, targets are shifting, and January 28 marks the next crucial date for Microsoft and those backing Azure’s AI-powered expansion.
