Microsoft (MSFT) Stock Moves Lower As Investors Assess Its AI Edge Against Google

Microsoft Corp (NASDAQ:MSFT) shares are down Friday morning as the investors continue to weigh its competitive position in the AI space. This decline comes amid the S&P 500 and Nasdaq-100 trading flat to start 2026.

• Microsoft stock is under selling pressure. Why is MSFT stock retreating?

Analyst Touts Azure's Gains, Flag Risks For Google's Model

On Wednesday, John Freeman, co-founder and senior analyst at Ravenswood Partners, discussed the potential impact of Microsoft's Azure on Alphabet Inc’s (NASDAQ:GOOGL) AI business, suggesting that Google's traditional revenue model could be at risk due to advancements in AI. The analyst highlighted that Microsoft's Azure is positioned as a leading AI cloud provider, which could significantly influence future growth.

Freeman pointed out that Microsoft's investments in AI infrastructure, including a $19 billion CAD commitment in Canada, are expected to enhance its data center capacity and digital sovereignty.

This strategic move is seen as a way to bolster its competitive edge against Google, which may face challenges in maintaining its revenue streams as AI technologies evolve.

Also Read: China Urges US To Work In The ‘Same Direction’ As ByteDance Hands Over Control Of TikTok’s Operations To Oracle-Led Group

The broader market is trading mixed Friday morning, with the Nasdaq-100 dropping around 0.25% midday.

Technical Analysis

Microsoft stock is currently trading 2.5% below its 20-day simple moving average (SMA) and 5.1% below its 100-day SMA, indicating some short-term weakness. Over the past 12 months, shares have increased approximately 13.01%, and they are currently positioned closer to their 52-week lows than highs.

The RSI is at a neutral level, suggesting that the stock is neither overbought nor oversold at this time. Meanwhile, MACD is below its signal line, indicating bearish pressure on the stock.

The combination of neutral RSI and bearish MACD suggests mixed momentum.

• Key Resistance: $489.50
• Key Support: $471.00

Earnings & Analyst Outlook

Investors are looking ahead to the next earnings report on January 28.

• EPS Estimate: $3.96
• Revenue Estimate: $80.27 billion
• Valuation: P/E of 34.4x (Indicates premium valuation)

Analyst Consensus & Recent Actions

The stock carries a Buy Rating with an average price target of $631.94. Recent analyst moves include:

• Wedbush: Outperform (Target $625.00)
• DA Davidson: Buy (Target $650.00)
• Rothschild & Co: Upgraded to Neutral (Lowered Target to $500.00)

Valuation Insight: While the stock trades at a premium P/E multiple, the strong consensus and 20% expected earnings growth suggest analysts view this growth as justification for the 34% upside to analyst targets.

Top ETF Exposure

• Fidelity Nasdaq Composite Index ETF (NASDAQ:ONEQ): 9.54% Weight
• iShares Global 100 ETF (NYSE:IOO): 9.94% Weight
• Xtrackers S&P 500 Scored & Screened ETF (NYSE:SNPE): 9.60% Weight

Significance: Because MSFT carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.

Price Action

MSFT Price Action: Microsoft shares were down 2.35% at $472.26 at the time of publication on Friday, according to Benzinga Pro data.

Benzinga Edge Rankings: MSFT stock currently holds a strong Quality score of 81.12 in Benzinga Edge rankings, even as its Value score sits at a weaker 13.76.

Read Next: Google’s Gemini Eating ChatGPT’s Lunch: Market Share Gain From 5% To 18% Is ‘Clearest Signal’ That Alphabet Is Winning AI War

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