Morgan Stanley cuts Microsoft price target to $600 from $650

Morgan Stanley cut its price target on Microsoft to $600 from $650, a roughly 7.7% reduction for the world's most valuable software company.

The revision was part of a broader software sector review by the bank on July 21. Morgan Stanley also initiated coverage on several other software stocks, including an underweight rating on Adobe with a $240 price target and an equal-weight rating on Salesforce at $185, according to a separate note.

The $50 cut to Microsoft's target comes as the bank reassesses valuation across the software sector. Microsoft, which has been a primary beneficiary of the artificial intelligence boom through its Azure cloud platform and Copilot offerings, now faces a more measured growth outlook from the bank.

The new $600 target implies the stock still has room to rise from current levels, though the reduction signals Morgan Stanley's view that near-term upside may be more limited than previously expected. Microsoft shares have gained roughly 30% over the past 12 months, driven by investor enthusiasm around AI-related revenue growth.

The price target cut follows a period of heightened scrutiny on mega-cap tech valuations. Microsoft is scheduled to report its fiscal fourth-quarter earnings later this month, which will provide the next major catalyst for the stock. Investors will watch for Azure growth rates, AI revenue contribution, and capital expenditure guidance as key metrics.

This article is for informational purposes only and does not constitute investment advice.