THE ETERNAL SOVEREIGN

Tag: Microsoft

  • Five major analyst moves in AI: Microsoft stock downgraded as it’s seen as “due for a pause.”

    Stifel downgrades Microsoft to Hold, says it’s “time to pause”

    Microsoft (NASDAQ: MSFT) saw a rare Wall Street downgrade this week as Stifel analyst Brad Reback lowered the stock to Hold from Buy, cautioning that expectations for fiscal and calendar 2027 appear overly optimistic. He cited ongoing cloud capacity constraints, rising capital intensity, and intensifying AI competition as key concerns.

    Reback cut Stifel’s price target to $392 from $540, saying the stock may need a breather after its strong run. Persistent limitations in Azure capacity remain a major headwind. Given well-known supply issues, along with strong results from Google’s GCP and Gemini platforms and increasing momentum at Anthropic, Reback believes meaningful near-term acceleration at Azure is unlikely.

    He also noted that revenue tailwinds from overlapping product cycles that benefited fiscal 2026 should fade, limiting upside in subsequent years. Meanwhile, investment spending is expected to surge. Stifel raised its fiscal 2027 capex estimate to roughly $200 billion, about 40% growth and well above the Street’s $160 billion forecast. As a result, Reback lowered his FY27 gross margin outlook to around 63%, versus a consensus near 67%.

    Operationally, Microsoft is entering what Reback described as a new — though still efficient — phase of elevated spending as it builds and monetizes proprietary AI platforms, a shift likely to weigh on operating margin leverage. While Stifel remains positive on Microsoft’s long-term strategic position, Reback said near-term visibility has become less clear, arguing the stock is unlikely to re-rate until capital spending moderates relative to Azure growth or cloud demand reaccelerates meaningfully.

    DA Davidson cuts Amazon as AWS cedes cloud leadership

    DA Davidson downgraded Amazon (NASDAQ: AMZN) to Neutral from Buy, warning that the company is losing its leadership position in cloud computing and showing early strategic strain in an AI-driven retail landscape. The firm lowered its price target to $175, arguing Amazon is now playing catch-up through increasingly aggressive investment.

    Analyst Gil Luria said AWS continues to trail Microsoft Azure and Google Cloud. While AWS posted 24% year-over-year growth, Google Cloud accelerated to 48%, and Azure grew 39% despite capacity constraints. Luria highlighted Amazon’s lack of a frontier AI research lab and the absence of a flagship partnership like Microsoft’s alliance with OpenAI as factors driving customer preference toward rivals.

    Falling behind, he warned, is forcing Amazon into heavier spending, pointing to more than $200 billion in projected capex. Luria suggested Amazon may ultimately need to pursue a $50 billion OpenAI investment to remain competitive in frontier AI models. He also raised concerns that Amazon’s retail business could face a structural disadvantage in a chat-centric internet dominated by Gemini and ChatGPT, where merchants embedded directly in leading AI platforms may gain superior traffic and advertising leverage.

    Wolfe sees massive long-term upside in Tesla robotaxis, but near-term pressure

    Wolfe Research said Tesla’s (NASDAQ: TSLA) robotaxi platform could become a major long-term growth engine, estimating the business could scale to $250 billion in annual revenue by 2035 as autonomous adoption expands. Analyst Emmanuel Rosner described 2026 as a catalyst-heavy year, with investor focus on robotaxi rollout, Optimus production, and the launch of unsupervised full self-driving.

    Wolfe’s model assumes 30% autonomous penetration, a 50% market share for Tesla, and pricing of $1 per mile, which could support roughly $2.75 trillion in equity value, or about $900 billion on a discounted basis. Additional upside could come from Optimus and FSD licensing.

    Despite the long-term optimism, Rosner remains cautious on near-term fundamentals, sitting below consensus earnings estimates for 2026 and 2027. He expects margin pressure from higher costs, pricing dynamics, and changes in FSD monetization, along with heavy AI-related investment weighing on earnings. Still, strong momentum in Tesla’s energy storage business provides some offset, and Wolfe remains tactically constructive given the steady flow of upcoming catalysts.

    Truist tells investors to “buy the dip” in AMD

    Truist Securities reiterated a bullish long-term view on AMD (NASDAQ: AMD), urging investors to buy the weakness after the stock fell more than 14% over the past week to its lowest level since October 2025. Analyst William Stein said AMD continues to compound earnings at roughly a 45% CAGR through 2030, while trading at just 11x estimated 2030 EPS.

    Although fourth-quarter results benefited from a one-off China-related dynamic, AMD still reaffirmed its outlook for 60% data-center growth and 35% overall sales growth, which management believes could drive more than $20 in EPS by 2030. Stein cited strong customer engagement, accelerating adoption of Instinct MI350 GPUs, and solid demand for fifth-generation EPYC processors as key drivers. Truist raised its 2027 EPS forecast and lifted its price target to $283, arguing long-term fundamentals outweigh short-term noise.

    Jefferies warns Palantir valuation still has room to fall

    Jefferies said Palantir Technologies (NASDAQ: PLTR) remains vulnerable to further downside despite a steep year-to-date decline of roughly 27%. Analyst Brent Thill emphasized that the call is based on valuation rather than fundamentals, noting that even after compressing from 73x to about 31x forward revenue, Palantir still trades at nearly double the valuation of other large-cap software peers.

    While acknowledging improving fundamentals, expanding addressable markets, and strengthening competitive positioning, Thill argued that valuation risk outweighs operational progress. The stock’s premium leaves it highly sensitive to shifts in AI sentiment and broader software sector trends. Jefferies believes cooling enthusiasm could push Palantir toward more sustainable valuation levels, reiterating its Underperform rating and $70 price target, even after strong quarterly results failed to justify the stock’s elevated multiple.

    Sources: Vahid Karaahmetovic

  • Microsoft-led selloff sparks broader market correction

    A sharp pullback in Microsoft (MSFT) has cascaded into a broader market correction. While the company beat earnings expectations on both the top and bottom lines, investors were disappointed by slower cloud performance and higher-than-anticipated capital expenditure plans. Microsoft shares have fallen 11.8% on the day (-12.3% YTD, -4.1% LTM), dragging the broader technology sector lower.

    The NASDAQ slid 2.3%, with semiconductor stocks posting similar losses. The Magnificent Seven index declined 1.6%, pulling the S&P 500 down 1.3%, although the equal-weighted S&P slipped just 0.3%. The Dow Jones Industrial Average fell 0.4%, while the Russell 2000 dropped 1.1% in sympathy. Market volatility picked up, with the VIX jumping to 19.4.

    Adding to the pressure, precious metals sold off, with gold down 2.2% and silver falling 3.5%. By contrast, copper surged 3.4% to a fresh all-time high of $6.58. Crude oil rallied 3.7% to $65.20 per barrel—after briefly touching $66.50—marking a gain of more than 10% over the past week amid rising risks of conflict involving Iran, the highest level since June 2025. Natural gas and gasoline prices also moved higher.

    Risk-off sentiment was further evident in cryptocurrencies, with Bitcoin sliding 5% to below $85,000, its lowest level in a year.

    Bond markets remained relatively calm. The U.S. 2-year yield eased 2 basis points to 3.55%, while the 10-year slipped 1 basis point to 4.23%. International yields, including those in Japan, were largely unchanged, and the U.S. dollar index was flat on the session.

    Overall, the market damage remained concentrated in technology and basic materials. Energy stocks advanced, and communication services outperformed, supported by strength in Meta Platforms (META). Meta shares jumped 7.6% following solid earnings beats and a well-received conference call, lifting the stock to gains of 9% year-to-date and 6.3% over the past 12 months. Meanwhile, consumer staples, utilities, industrials, financials, and real estate sectors all traded in positive territory.

    This selloff increasingly looks like a textbook buying opportunity, with early signs of a rebound already emerging across the major equity indexes. Another factor weighing on sentiment is the renewed risk of a government shutdown, which is especially challenging given the ongoing data blackout following last year’s record-length shutdown.

    While the recent swing—from the S&P 500 touching 7,000 just yesterday to bottoming near 6,870 today—represents a level of volatility that has unsettled some investors, the fundamental backdrop of the economy remains solid. Volatility has clearly picked up, but the broader trend continues to point higher.

    Sources: Louis Navellier

  • Wall Street futures edge lower as Microsoft’s decline drags, while Apple tops expectations

    U.S. stock index futures slipped slightly on Thursday evening after Wall Street ended mostly lower, as weaker-than-expected results from Microsoft rekindled doubts over the returns on heavy AI spending, while investors absorbed a wave of other corporate earnings.

    S&P 500 futures dipped 0.3% to 6,975.0 points, Nasdaq 100 futures declined 0.3% to 25,916.75 points, and Dow Jones futures also fell 0.3% to 49,049.0 points by 19:36 ET (00:36 GMT).

    Wall Street dips as Microsoft’s slide weighs; Apple earnings take center stage

    The S&P 500 and NASDAQ Composite closed Thursday’s regular session on a weak note, with technology stocks among the session’s biggest laggards.

    Shares of Microsoft Corporation (NASDAQ:MSFT) plunged 10% after the company’s quarterly earnings highlighted slower cloud revenue growth and record AI-related spending, failing to reassure investors about near-term returns.

    Microsoft’s selloff dragged down broader technology sentiment, with software peers including ServiceNow Inc (NYSE:NOW) and SAP (NYSE:SAP) also posting steep declines following disappointing earnings and outlooks.

    Investors were also focused on Apple Inc.’s (NASDAQ:AAPL) earnings released after the close, which topped expectations as strong iPhone demand and a recovery in Greater China boosted both revenue and profit.

    Apple reported roughly $143.8 billion in revenue and earnings per share well above consensus estimates, sending its shares up nearly 1% in after-hours trading.

    SanDisk jumps on earnings beat; Trump backs spending agreement

    Elsewhere on the earnings front, shares of SanDisk Corporation (NASDAQ:SNDK) jumped 16% in after-hours trading after the storage-chip maker posted a strong profit beat and lifted its outlook, driven by stronger-than-expected demand for data-center and AI-focused memory products.

    By contrast, Visa (NYSE:V) shares edged lower despite surpassing first-quarter earnings and revenue forecasts, as investors focused on weaker-than-expected transaction volumes and ongoing caution surrounding broader consumer spending.

    On the political side, President Donald Trump voiced support for a bipartisan spending agreement crafted by Senate Republicans and Democrats aimed at avoiding an imminent government shutdown, expressing his backing on Truth Social and calling for cooperation.

    The deal would provide funding for most federal agencies while deferring divisive immigration issues for future negotiations.

    Sources: Investing