Piper Sandler analyst Brent Bracelin has adjusted the price target for Microsoft (MSFT, Financial), decreasing it from $520 to $435, while maintaining an Overweight rating on the stock. This revision reflects broader cutbacks across the cloud applications and analytics sector, driven by mounting short-term obstacles such as tariff issues, policy changes, and challenges in artificial intelligence (AI) adoption.
The analysis highlights that software companies are currently facing difficulties, particularly due to waning investor sentiment amid a slowdown in industry growth for the fourth consecutive year. Additionally, hurdles related to AI adoption are contributing to a less optimistic outlook in the sector. Valuation multiples have significantly declined, reaching their lowest point in seven years. However, the direct impact of tariffs on software models has been deemed relatively minor.
