Microsoft Price Targets Slashed Is This a Discount

 Hadar.Goldberg
 
  Hadar.Goldberg
 
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Hadar Goldberg is a talented financial journalist with a strong passion for analyzing the stock market. She has a deep understanding of financial markets and is skilled at conducting research and analysis to uncover valuable insights for her readers. Hadar is known for her ability to explain complex financial concepts in a clear and concise manner.
 

•  23 Jan 2026
 

•   MSFT  
   
  -0.69%

Wall Street is sending a mixed signal that has every $MSFT investor doing a double take. In a move that feels like a paradox, some of the world's most influential investment banks are cutting their price targets for the tech giant even while they scream at clients to keep buying. If you are looking at your portfolio and wondering why the safest stock in tech is under pressure, you are not alone. This isn't just about one company it’s a fundamental shift in how the market values the entire software world.

For months, the software sector has been the darling of the AI revolution, but the tide is turning on valuations. We are witnessing a massive de-rating where investors are no longer willing to pay a massive premium just for the promise of future growth. Cantor Fitzgerald recently lowered its sights from $639 to $590, and UBS followed suit, trimming its target to $600. Even with these cuts, the message remains clear: the business is healthy, but the price tag was simply getting too heavy for the current market appetite.

The real tension lies in the upcoming January 28 earnings report. Traders are laser-focused on Azure, Microsoft’s cloud engine. While the company is guiding for a respectable 37% growth, that is a slight step back from the 40% we saw previously. In the high-stakes world of MSFT, even a minor deceleration can trigger a sell-off.
Yet, behind the scenes, demand for AI solutions and Copilot adoption is actually accelerating. Major corporate clients aren't just testing the waters anymore; they are signing larger, long-term expansion deals that suggest the AI hype is finally turning into real, billable revenue.

So, why the price target cuts? It comes down to multiples Analysts are now valuing MSFT at roughly 29 times forward earnings a notable discount compared to the nosebleed levels of last year. This caution is partly driven by Microsoft's massive capital expenditure. The company is pouring billions into data centers like the new Fairwater sites in the U.S. to ensure they have the concrete and electricity needed to power the next decade of AI. While some worry these costs are too high, others argue that this infrastructure is the moat that will eventually leave competitors in the dust.

Despite the short-term noise and the 7% slide the stock has seen recently, the consensus among 34 top analysts remains overwhelmingly bullish. With 32 Buy ratings and an average target of $626, the pros are essentially saying that the current dip is a valuation reset, not a business failure. For the disciplined trader, this moment represents a classic clash between technical pressure and fundamental strength.

As we head into earnings week, the question isn't whether Microsoft is growing, but whether the market is finally ready to reward a more reasonable price for the king of the cloud.

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