Microsoft (NASDAQ:MSFT) Shares Down 1.9% – Should You Sell?

Shares of Microsoft Corporation (NASDAQ:MSFT) dropped 1.9% on Friday. The stock traded as low as $524.43 and last traded at $529.05. 23,820,403 shares traded hands during trading, a decline of 30% from the average session volume of 34,054,164 shares. The stock had previously closed at $539.44.

Microsoft News Roundup

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Microsoft is reportedly the only major hyperscaler expected to maintain positive free cash flow over the next year despite heavy AI investment. That suggests its balance sheet and operating cash generation may be better positioned to fund data-center expansion than those of some peers. Microsoft’s Free Cash Flow Expected to Remain Positive
• Positive Sentiment: Microsoft signed a 20-year agreement with NiSource for approximately 1,100 megawatts of power beginning in 2028 for an Indiana data-center campus. Securing electricity addresses a key constraint on expanding Azure’s AI capacity and signals sustained long-term demand. Microsoft Signs 1,100 MW Power Deal With NiSource
• Positive Sentiment: Analysts continue to cite Azure growth, enterprise AI adoption and Copilot momentum ahead of the October 28 earnings report. StoneX raised its price target to $600 from $525, while UBS previously lifted its target to $675 and maintained a buy rating. StoneX Raises Microsoft Price Target
• Neutral Sentiment: Microsoft’s AI chief said the company developed a model that may outperform a comparable OpenAI system using substantially less computing power. The claim could improve Microsoft’s AI economics, but it has not yet translated into a clear financial impact. Microsoft AI Model Compared With OpenAI
• Negative Sentiment: The U.K. Competition and Markets Authority is examining Microsoft’s position in business software and cloud services, including potential barriers for customers switching providers. Possible remedies or a change in Microsoft’s regulatory status could increase compliance costs and weaken its software and cloud ecosystem advantages. U.K. Competition Regulator Targets Microsoft
• Negative Sentiment: Investors remain concerned that AI infrastructure spending could pressure margins and free cash flow, particularly as Microsoft reportedly pursues cost reductions within Azure. The stock’s sharp recent rally also raises the bar for the upcoming earnings report. Microsoft Q1 Earnings Preview

Analyst Ratings Changes

MSFT has been the subject of several research analyst reports. Citigroup raised their price target on Microsoft from $600.00 to $636.00 and gave the stock a “buy” rating in a research report on Thursday. BMO Capital Markets started coverage on shares of Microsoft in a research note on Monday, October 5th. They issued an “outperform” rating for the company. DA Davidson reaffirmed a “buy” rating and set a $550.00 target price on shares of Microsoft in a research note on Thursday, July 30th. Citizens Jmp reiterated a “market outperform” rating and set a $550.00 target price on shares of Microsoft in a report on Tuesday, September 15th. Finally, Mizuho raised their price target on shares of Microsoft from $510.00 to $600.00 and gave the company an “outperform” rating in a research report on Thursday. Forty-two analysts have rated the stock with a Buy rating, four have given a Hold rating and two have given a Sell rating to the stock. According to data from MarketBeat, Microsoft has a consensus rating of “Moderate Buy” and an average target price of $589.71.

Microsoft Stock Down 1.9%

The firm’s 50 day simple moving average is $504.95 and its 200-day simple moving average is $439.96. The company has a market cap of $3.93 trillion, a price-to-earnings ratio of 29.46, a P/E/G ratio of 1.71 and a beta of 1.10. The company has a debt-to-equity ratio of 0.07, a current ratio of 1.23 and a quick ratio of 1.22.

Microsoft (NASDAQ:MSFT) last issued its quarterly earnings results on Wednesday, July 29th. The software giant reported $4.74 earnings per share for the quarter, topping analysts’ consensus estimates of $4.24 by $0.50. Microsoft had a net margin of 40.31% and a return on equity of 31.98%. The firm had revenue of $90.01 billion during the quarter, compared to analysts’ expectations of $87.62 billion. During the same quarter in the prior year, the business earned $3.65 EPS. Microsoft’s quarterly revenue was up 17.7% compared to the same quarter last year. As a group, sell-side analysts anticipate that Microsoft Corporation will post 19.65 earnings per share for the current year.

Microsoft Increases Dividend

The company also recently declared a quarterly dividend, which will be paid on Thursday, December 10th. Investors of record on Thursday, November 19th will be issued a dividend of $0.98 per share. This is an increase from Microsoft’s previous quarterly dividend of $0.91. This represents a $3.92 annualized dividend and a yield of 0.7%. The ex-dividend date of this dividend is Thursday, November 19th. Microsoft’s dividend payout ratio is currently 20.27%.

Insiders Place Their Bets

In related news, CEO Judson Althoff sold 10,000 shares of Microsoft stock in a transaction that occurred on Wednesday, August 5th. The stock was sold at an average price of $487.89, for a total value of $4,878,900.00. Following the sale, the chief executive officer directly owned 100,447 shares in the company, valued at $49,007,086.83. The trade was a 9.05% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this link. Also, EVP Amy Hood sold 7,305 shares of the company’s stock in a transaction on Tuesday, October 13th. The stock was sold at an average price of $545.42, for a total value of $3,984,293.10. Following the transaction, the executive vice president directly owned 555,396 shares in the company, valued at $302,924,086.32. This represents a 1.30% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 150,314 shares of company stock worth $75,404,992 over the last quarter. 0.03% of the stock is owned by company insiders.

Institutional Investors Weigh In On Microsoft

A number of hedge funds and other institutional investors have recently modified their holdings of MSFT. State Street Corp grew its stake in Microsoft by 2.9% in the 2nd quarter. State Street Corp now owns 315,653,206 shares of the software giant’s stock valued at $117,744,959,000 after acquiring an additional 8,944,917 shares during the last quarter. Auto Owners Insurance Co raised its position in Microsoft by 56,160.8% during the fourth quarter. Auto Owners Insurance Co now owns 60,116,384 shares of the software giant’s stock worth $29,073,486,000 after acquiring an additional 60,009,531 shares during the last quarter. Bank of America Corp DE acquired a new position in Microsoft during the second quarter worth about $27,338,370,000. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC lifted its holdings in shares of Microsoft by 0.9% in the second quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 64,375,360 shares of the software giant’s stock valued at $24,013,297,000 after purchasing an additional 543,172 shares in the last quarter. Finally, Legal & General Group Plc purchased a new stake in shares of Microsoft in the second quarter valued at about $18,306,443,000. 71.13% of the stock is currently owned by institutional investors and hedge funds.

Microsoft Company Profile

Microsoft Corporation is a global technology company that develops software, cloud services, devices, gaming products and business solutions. Founded in 1975 by Bill Gates and Paul Allen, the company is best known for the Windows operating system and Microsoft Office productivity software. Microsoft is headquartered in Redmond, Washington, and serves consumers, businesses, governments and educational institutions worldwide.

Microsoft’s productivity and business offerings include Microsoft 365 applications such as Word, Excel, PowerPoint and Outlook, along with collaboration tools including Teams.