NEW YORK, Jan 22, 2026, 05:19 ET — Premarket
- Shares of Microsoft fell 2.3% Wednesday following another wave of target price reductions on Wall Street
- Analysts will focus on Azure cloud expansion and AI-driven capacity limits ahead of the Jan. 28 earnings report
- Reuters reported that Microsoft intends to sell its stake in India’s PhonePe through the payments company’s upcoming IPO
Microsoft shares dropped 2.3% on Wednesday, closing at $444.11, following Rothschild & Co Redburn’s decision to lower its price target to $450. The new target reflects the analyst’s forecast for the stock’s value over the coming year.
The timing is crucial as Microsoft is set to release fiscal second-quarter results next week. Traders are gearing up for fresh insights on Azure’s growth and how much the company is spending to back AI workloads — those intense computing tasks behind training and running AI models.
The stock is emerging from a volatile period in global markets, where investors have reacted sharply to changing trade news that has swung risk appetite up and down.
Alex Haissl at Redburn maintained a Neutral rating despite lowering the target.
Citi cut its price target to $660 from $690 but maintained its Buy rating, citing a reseller survey and partner data that showed a “more mixed” outlook for the quarter. The firm still expects Azure to outperform but lowered its non-Azure projections due to a softer PC forecast. TipRanks
Mizuho cut its price target to $620 from $640 but kept an Outperform rating, noting channel checks were “generally good” and AI adoption remained “very strong.” The firm did flag that some clients seemed less eager with end-of-year budget spending than usual. TipRanks
TD Cowen lowered its price target to $625 from $655 but maintained a Buy rating. The firm noted checks showing demand for GPU and CPU infrastructure remains stable to stronger. They added roughly “2 points of upside” to their 37% constant-currency Azure growth forecast, excluding currency swings. Still, they cautioned that capacity limits might keep the stock stuck in a range for now. TipRanks
Investors are zeroing in on three key points: Azure’s growth trajectory, the availability of computing capacity, and if Microsoft’s spending continues to outpace what the market is willing to absorb.
A quieter story is unfolding: Reuters says Microsoft intends to completely sell off its stake in India’s PhonePe amid the payments company’s IPO filings. The move would involve a secondary sale, meaning Microsoft is offloading existing shares rather than PhonePe issuing new ones.
But there’s a risk that demand signals and supply won’t align neatly. If Microsoft’s guidance indicates cloud growth is still capped by capacity constraints, or if another round of tariff-driven volatility rattles big tech, the stock could stay under pressure despite beating headlines.
Microsoft’s fiscal Q2 earnings drop Wednesday after the market closes, with the conference call set for 2:30 p.m. Pacific. CEO Satya Nadella and CFO Amy Hood will lead the discussion.
