New York, Jan 21, 2026, 09:42 EST — Regular session
- Microsoft shares slipped roughly 1.4% in early trading, with investors adopting a cautious stance amid tariff-related news.
- TD Cowen cuts its price target, pointing to cloud capacity limits even as AI infrastructure demand remains strong
- Attention turns to Trump’s comments at Davos and Microsoft’s earnings report on Jan. 28
Shares of Microsoft (MSFT.O) dipped roughly 1.4% to $448.16 in early Wednesday trading, down from Tuesday’s close at $454.52. The stock fluctuated between $448.05 and $452.69 in the initial session. 1
The slide follows Wall Street’s steepest drop in three months, with the three main U.S. indexes tumbling nearly 2% as investors sought safer bets. Tensions have risen since President Donald Trump threatened new tariffs on European allies amid his Greenland purchase push. Trump is set to deliver a keynote at the World Economic Forum in Davos on Wednesday. “The market is nervous about what Trump may say … backpedaling into something more reasonable,” said Gina Martin Adams, chief market strategist at HB Wealth. 2
Microsoft faces macro noise just a week ahead of earnings, a period when investors zero in on cloud growth, AI demand, and the costs behind them. Given its heavy weight in key indexes, any stock movement quickly ripples through sentiment indicators.
TD Cowen cut its price target on Microsoft to $625 from $655 but held firm on its Buy rating, citing checks that show demand for GPU and CPU infrastructure is “stable or strengthening.” (GPUs are graphics chips used to train AI models; CPUs are general-purpose processors.) The firm flagged roughly two percentage points of upside to its 37% “cc” Azure growth estimate—cc stands for constant-currency, excluding forex effects—but noted capacity constraints might keep the stock range-bound in the short term. 3
On Tuesday, Microsoft announced a new deal with Bristol Myers Squibb (BMY.N), which will use Microsoft’s AI-powered radiology platform to accelerate early lung cancer detection. The partnership plans to roll out FDA-cleared radiology AI algorithms via Microsoft’s Precision Imaging Network, analyzing X-rays and CT scans to spot lung disease. 4
“By merging Microsoft’s scalable radiology tools with Bristol’s specialized knowledge, we’ve created a unique AI-driven workflow that assists clinicians in swiftly and accurately identifying patients,” said Alexandra Goncalves, vice president and head of digital health at Bristol Myers Squibb. 4
Deals like this bolster Microsoft’s argument that AI tools fit into actual workflows, beyond just showcase demos. Still, the market action seems more influenced by geopolitics and risk appetite than any single contract at the moment.
Microsoft will host its fiscal 2026 Q2 earnings call on Wednesday, Jan. 28. CEO Satya Nadella and CFO Amy Hood are expected to lead the discussion. 5
Investors want clues on how fast Microsoft can ramp up data-center capacity for AI tasks, and if that bottleneck is loosening. It’s the flip side: quicker growth paired with rising expenses.
The downside risk is already in the headlines. Should Davos bring tougher tariff signals—or if markets begin to factor in a rougher U.S.-Europe standoff—big tech could remain under pressure. In that scenario, any cloud momentum shortfall would probably weigh on Microsoft more than usual.
Traders are eyeing two key events: Trump’s Davos speech on Wednesday and Microsoft’s earnings report on Jan. 28.
