Microsoft Stock Gets Price Cut On Tariff-Led Spending Risks, But Retail Holds Out Hope

Microsoft Corp. (MSFT) stock pulled back in Thursday’s premarket trading following its 10% jump in the previous session. The negative sentiment could be traced back to the declines in the futures market as traders await a duo of data points that could offer cues on the growth and inflation trajectory.

Stoking the weakness further could be downward price target adjustment by Wedbush analyst Daniel Ives.

The analyst said the “economic Twilight Zone” that hit the U.S. economy following President Donald Trump’s tariffs announcement last week and the subsequent 90-day pause has created real damage to the corporate spending mentality.

Ives believes Trump’s about-turn on tariffs may have been due to the rise in bond yields.

As such, the analyst cut his estimates for Microsoft’s June quarter and the fiscal year 2026, and in turn reduced the price target for the stock to $475 from $550 — which still implies roughly 22% upside potential.

Wedbush maintained an ‘Outperform’ rating and remained long-term bullish on the stock. 

The brokerage said, “The tariff ‘game of poker’ is adding a high level of near-term uncertainty to any company with supply chains/cost inputs around China and those tariffs remain very much on the table.”

Ives estimates conservatively that 10%-15% of many cloud and AI initiatives in the U.S. he is tracking in the field could be pushed/slowed down during this period of uncertainty. 

“Microsoft will be front and center in this economic period of uncertainty,” he added. Ives expects investors to look past June results and view the quarter as a “mulligan” for Microsoft and the rest of the tech world.

The analyst said investors should brace for a very bumpy ride through the upcoming tech earnings season, which will be marked by uncertainty, and a lack of guidance from many tech/China exposed tech players.

After taking over from Apple, Inc. (AAPL) as the most valued global company on Tuesday, Microsoft has ceded its position yet again to the tech giant following the latter’s relatively stronger gain on Wednesday.

On Stocktwits, retail sentiment toward Microsoft stock improved to ‘bullish’ (56/100) heading into Thursday from ‘neutral’ a day ago. The message volume on the stream stayed high.

A bullish watcher based his optimism on Microsoft on their expectations that just like after the dot-com bubble burst and the 1987 crash, there would be a relief rally.

Another user said if the economy avoids a recession, there is a fair chance that Microsoft stock may have bottomed.

In early premarket trading, Microsoft stock fell 1.73% to $383.74. The stock has cut its year-to-loss to 7% with Wednesday’s jump.

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