Microsoft Stocks Drop: Is it a Buying Opportunity?

Current Status of Microsoft Stocks

One of the leading names in the technology sector, Microsoft, experienced a 2.9% decline in its shares after the third-quarter financial results. This situation disappointed investors considering buying. However, analysts' forecasts suggest that the stock will regain value at $600 and above.

Investor Concerns

Microsoft's cautious statements regarding its high spending in artificial intelligence (AI) could put pressure on investors. The company is concerned about the imbalance between demand and supply for AI. The demand for high-speed processing power may fall short in providing critical components such as GPUs, network chips, and energy needed for Microsoft's data centers.

High AI Expenditures

Microsoft reported its capital expenditures on AI infrastructure to be $34.9 billion. This figure represents a 74% increase compared to the previous estimate of $20.5 billion. The company's forecast that capital expenditures will remain at high levels until 2026 may affect the rate at which Azure platform adds new customers.

Financial Performance and Expectations

On the other hand, Microsoft's financial performance remained quite robust. The revenue figure was $77.7 billion, exceeding the $75.6 billion expectation, with an annual growth of 18%. Earnings per share stood at $3.72, above the expected $3.68, while Cloud revenues increased by 28% to reach $49.1 billion.

Analyst Opinions and Price Predictions

This temporary pause in stock price does not mean the end of the upward trend according to analysts. Four analysts set their target prices for Microsoft shares between $625 and $650 after the report. The current average target price is approximately $631, indicating an upside potential of 18%.