- Microsoft’s (MSFT) stock dropped over 5% to $370.30 on Thursday, driven by Wedbush Securities’ concerns over tariff uncertainty and rising U.S. bond yields impacting corporate spending, with up to 15% of cloud and AI projects, particularly Azure, at risk of delay.
- Wedbush analyst Dan Ives cut Microsoft’s price target from $550 to $475 and lowered earnings forecasts for the June quarter and fiscal year 2026, citing the unpredictable tariff “poker game” and Chinese supply chain risks.
- Despite the ‘Outperform’ rating, Ives expects a rocky tech earnings season ahead of Microsoft’s April 30 report, though investors may overlook a weak June if key deals shift to late 2025.
Microsoft’s (MSST) stock plummeted more than 5% to $370.30 during Thursday’s midday trading, reflecting broader market unease as Wedbush Securities highlighted tariff uncertainty as a significant drag on corporate spending. Dan Ives, a Wedbush analyst, pointed to the volatile tariff landscape – marked by shifting China policies, suspensions, reinstatements, and a 90-day pause – alongside rising U.S. bond yields, as key factors eroding business investment confidence. This turbulence, Ives warned, could delay up to 15% of cloud and AI-related projects, with Microsoft’s Azure unit poised to bear the brunt of any slowdown, given its critical role in the company’s growth strategy.
Despite the near-term challenges, Wedbush maintained its ‘Outperform’ rating on Microsoft, though Ives adjusted expectations downward, trimming the firm’s earnings forecast for the June quarter and fiscal year 2026 while slashing the price target from $550 to $475. The revised outlook reflects what Ives described as a “poker game” involving tariffs and risks tied to Chinese supply chains, which could disrupt Microsoft’s momentum in cloud computing and AI innovation. With quarterly results due on April 30, Ives anticipates a turbulent tech earnings season, suggesting that investors might forgive a lackluster June performance if major deals slide into the latter half of the year.
The tariff-related headwinds come at a pivotal time for Microsoft, as Azure and AI initiatives remain central to its competitive edge in a tech landscape increasingly shaped by global economic policies. Ives’ analysis underscores a broader concern: the interplay between U.S.-China trade dynamics and rising bond yields could force companies to rethink capital allocation, potentially stalling up to 15% of planned tech investments. While the lowered $475 price target signals caution, Wedbush’s continued optimism hints at Microsoft’s resilience, provided it can navigate the uncertainty and capitalize on deferred opportunities later in 2025.
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