New York, February 6, 2026, 05:39 EST — Premarket
- MSFT is up roughly 1.4% in premarket action, rebounding after a 4.95% drop to $393.67 on Thursday.
- Stifel downgraded Microsoft from Buy to Hold and dropped its price target sharply, from $540 down to $392.
- Traders gear up for added volatility with U.S. jobs and CPI reports pushed back to Feb. 11 and Feb. 13.
Microsoft shares climbed roughly 1.4% in premarket trading Friday, reaching about $399. The jump follows a sharp drop of nearly 5% the day before, when the stock closed at $393.67.
The rebound arrives as investors continue to pull back from megacap tech, concerned that the rush on artificial-intelligence spending is hitting income statements quicker than profits are reflecting it. Microsoft, a major spender, stands at the crossroads of cloud and software demand.
Software shares took a hit. The S&P 500 software and services index dropped 4.6% Thursday, wiping out roughly $1 trillion in market value since January 28. Traders have dubbed the selloff “software-mageddon.” Microsoft tumbled about 5% on the day. “I would classify this as a sell-everything mindset at this point,” said Dave Harrison Smith, chief investment officer and head of technology investing at Bailard. Reuters
Stifel’s downgrade weighed on Microsoft shares. Analyst Brad Reback dropped the rating to “Hold” from “Buy,” slashing his target price from $540 to $392. He called the 2027 revenue and earnings forecasts “too optimistic.” Simply put, he said it was “time for a break.” Investing.com
Reback pointed to constraints in Azure supply and intensifying competition in AI tools and services following Alphabet’s robust cloud earnings. He also said Microsoft’s short-term outlook appeared “cloudy,” with rivals advancing and heavy spending putting pressure on margins before any clear returns emerge. MarketWatch
Microsoft’s stock has swung sharply since its recent quarterly report, which highlighted record AI-related spending alongside slower cloud growth. The mixed results initially pushed shares down in after-hours trading.
Big Tech’s spending spree is starting to weigh on investors. Amazon slid in premarket trading Friday after revealing hefty capital expenditure plans for 2026. Alphabet, too, signaled a steep investment boost, and Microsoft is stepping up spending as well. “The magnitude of the spend is materially greater than consensus expected,” noted analysts at MoffettNathanson. Reuters
Microsoft found itself in the spotlight on the policy front as Britain announced plans to collaborate with the company, along with academics and experts, to create a system aimed at spotting deepfake content online. The initiative is part of the UK’s effort to establish standards for combating harmful AI-generated material. “Deepfakes are being weaponised by criminals to defraud the public, exploit women and girls, and undermine trust in what we see and hear,” technology minister Liz Kendall said in a statement. Reuters
That relief rally might not last. “The selloff… is a manifestation of an awakening to the disruptive power of AI,” said James St. Aubin, chief investment officer at Ocean Park Asset Management. He added, “the threat is real and valuations must account for that.” Some investors want clearer triggers — such as evidence AI features are actually boosting revenue — before committing more aggressively. Reuters
Macro factors could push markets further. The U.S. Bureau of Labor Statistics announced January’s employment report is set for release on Wednesday, while the consumer price index for the same month has been pushed to the following Friday. The delay comes after a short government shutdown disrupted the usual timetable.
Microsoft faces a clear test: can Friday’s early bounce last into the cash open? Investors are balancing Azure’s growth prospects against AI-related costs and the overall risk climate. Global markets remain volatile, caught between worries about AI and shifting bets on rate cuts.
