Billionaire Investor Reduces Microsoft Stake Amid Cloud Growth Concerns

Activist investor Dan Loeb’s Third Point LLC slashed its stake in Microsoft Corporation (NASDAQ:MSFT) by 16% in the fourth quarter of 2025.

According to a recent 13F filing, reflecting his holdings as of Dec. 31, 2025, Third Point trimmed its stake in the major software company to 925,000 from 1,100,000 in the third quarter of 2025.

Second-Quarter Earnings Release

In January, Microsoft reported second-quarter revenue of $81.3 billion, up 21% year-over-year, beating a Street consensus estimate of $80.25 billion. The company reported non-GAAP earnings per share of $4.14, beating a Street consensus estimate of $3.86.

Looking ahead, Microsoft forecasts fiscal third-quarter revenue in the range of $80.65 billion to $81.75 billion, with foreign exchange expected to add roughly three percentage points to year-over-year growth.

Analyst View

Several analysts lowered their price targets after the company beat revenue and earnings-per-share estimates in the second quarter.

• JPMorgan analyst Mark Murphy maintained an Overweight rating on Microsoft and lowered the price forecast from $575 to $550.
• Wedbush analyst Dan Ives maintained an Outperform rating and slashed the price forecast from $625 to $575.
• KeyBanc analyst Jackson Ader maintained an Overweight rating and reduced the price forecast from $630 to $600.
• Goldman Sachs analyst Gabriela Borges maintained a Buy rating and cut the price forecast from $655 to $600.

The JPMorgan analyst said Microsoft could be constrained by CPU supply, impacting Azure growth. He added, “The underlying drivers include softness in less-critical Gaming and Search/Advertising segments, CPU/GPU capacity constraints in Azure, and a conscientious decision to steer more GPU capacity into Copilot products.”

The Wedbush analyst says Microsoft is pushing a balancing act between high CapEx spending and staying focused on cloud growth. Investors wanted to see lower CapEx from the company.

The KeyBanc analyst writes that Azure growth was a disappointment to many investors and guidance was also “less inspiring,”. Also, the analyst added the guidance is “fine but not good enough.”

Apart from this, Stifel analysts downgraded the stock and lowered their price target. In a pessimistic note, analyst Brad Reback downgraded Microsoft to a hold rating and lowered the price target to $392.

He said the market's expectations for full-year revenue and earnings-per-share were too optimistic given well-documented Azure supply issues, Google's strong Gemini results and growing Anthropic momentum.

Prominent investor Chamath Palihapitiya wrote, "Microsoft has been the worst-performing stock of the hyperscalers since the November 30, 2022, launch of ChatGPT and has significantly underperformed the Nasdaq during that period,"

Recent Key Events

• Microsoft backed OpenAI announced $110 billion in new investment at a $730 billion pre-money valuation. This includes $30 billion from SoftBank, $30 billion from NVIDIA, and $50 billion from Amazon. The company also signed a strategic partnership with Amazon and secured next generation inference compute with NVIDIA.
• Last month, Microsoft filed an amicus brief in federal court in San Francisco supporting Anthropic’s request for a temporary restraining order against the Pentagon’s “supply chain risk” designation.
• This development came a day after Microsoft said it would add Claude Cowork from Anthropic to its Microsoft 365 Copilot platform, which had previously relied exclusively on models from OpenAI’s ChatGPT.

Top ETF Exposure

• State Street SPDR Portfolio S&P 500 Growth ETF (NYSE:SPYG): 9.60% Weight
• iShares Core S&P US Growth ETF (NASDAQ:IUSG): 9.55% Weight
• iShares Expanded Tech-Software Sector ETF (BATS:IGV): 9.70% Weight

MSFT Stock Price Activity: Microsoft shares were up 0.66% at $371.79 at the time of publication on Thursday, according to Benzinga Pro data.

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