Microsoft Stock Falls 8% as AI Concerns Persist, June 07

Microsoft stock fell 8% this week to $416.67 USD, extending its year-to-date decline to 6%. The selloff reflects investor concerns about the company’s AI strategy and reliance on third-party AI models. However, Wells Fargo raised its price target to $650 USD, signaling confidence in Microsoft’s long-term positioning despite near-term headwinds.

Why the Stock Dropped This Week

Microsoft fell 8% this week as the broader tech sector faced a selloff. The stock is down 6% year-to-date, driven by investor concerns about its dependence on third-party AI models and questions about its AI strategy execution. Insiders have been selling shares, with CEO Judson Althoff selling 15,500 shares for an estimated $7.1 million and EVP Kathleen Hogan selling 12,320 shares for $5.0 million over the past six months.

Analyst Upgrades Offset Weakness

Wells Fargo analyst Michael Turrin raised his price target to $650 USD from $625 USD on June 1, keeping an Overweight rating. Turrin believes Microsoft is better positioned at the software layer than the market realizes and is making the right moves on AI capacity and Copilot. Citizens also initiated coverage with an Outperform rating and a $550 USD price target, citing an attractive opportunity for capital appreciation despite the stock’s recent weakness.

Technical Signals Show Mixed Picture

The RSI sits at 47.44, indicating neutral momentum. The MACD histogram is negative at -0.66, suggesting downward pressure. The stock trades below its 200-day moving average of $457.29 USD, which TipRanks flags as a sell signal. However, Meyka rates Microsoft an A- with a 12-month forecast of $524.66 USD, implying 26% upside from current levels.

What This Means for Investors

With Meyka rating the stock A- and analyst consensus showing 74 Buy ratings against 2 Holds, the data points to limited downside risk at current prices. The 12-month forecast of $524.66 USD sits between Citizens’ $550 target and Wells Fargo’s $650 target, suggesting the market has priced in near-term uncertainty but not long-term recovery.

Final Thoughts

Microsoft’s 8% weekly drop reflects AI strategy concerns, but analyst upgrades and Meyka’s A- rating suggest the selloff may be overdone. At $416.67 USD, the stock offers potential upside if the company proves its AI positioning.

FAQs

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.