Microsoft Q3 Beats Estimates but Shares Drop 7% After Stifel Downgrade
Microsoft posted fiscal Q3 revenue of $81 billion and adjusted EPS of $4.14, beating expectations of $80.27 billion and $3.97, yet shares plunged 7% in extended trading. Stifel downgraded the stock to Hold and cut its price target to $392 from $540, citing Azure supply constraints and AI competition.
1. Fiscal Q3 Results Exceed Forecasts
Microsoft reported fiscal third-quarter revenue of $81 billion and adjusted earnings of $4.14 per share, surpassing analyst projections of $80.27 billion and $3.97, driven by continued growth in cloud and enterprise services.
2. Extended Trading Reaction
Despite the beat, the stock declined 7% in after-hours trading as investors digested the outlook and valuation concerns raised by analysts.
3. Stifel Downgrade and Price Target Cut
Stifel downgraded the shares from Buy to Hold and lowered its 12-month price target from $540 to $392, citing an overly optimistic fiscal 2027 guidance.
4. Azure Cloud Outlook and Constraints
The downgrade centers on anticipated supply constraints in Azure and intensifying competition in AI infrastructure, prompting questions over the sustainability of Microsoft’s cloud growth trajectory.