Highlights

• Microsoft shares declined nearly 10% after a key brokerage reduced its target price.
• Q2 results exceeded estimates, while elevated AI capex weighed on sentiment.
• Broker consensus remains largely positive despite recent stock volatility.

Shares of Microsoft Corporation (NASDAQ:MSFT) witnessed a sharp decline on January 29, 2026, falling nearly 10% in a single session. The stock closed at USD 433.50, down USD 48.13, after touching an intraday low of USD 421.02. The sell-off followed a revision in valuation expectations by Scotiabank, which lowered its price target on the stock from USD 650 to USD 600, while retaining a sector outperform rating.

Trading activity spiked significantly during the session, with volumes reaching around 127.8 million shares, well above the stock’s daily average of approximately 32.8 million shares. The previous session had ended at USD 481.63, highlighting the scale of the single-day correction.

Target Cut Triggers Market Reaction

The stock movement came after Scotiabank reassessed Microsoft’s near-term outlook, citing concerns around elevated investment levels. While the brokerage maintained a positive long-term stance, the reduction in the target price appeared to influence short-term market sentiment. The sharp rise in trading volume suggested heightened investor activity following the downgrade.

Market participants also reacted to a broader trend of analyst recalibration, as multiple brokerages reviewed their assumptions after the company’s latest earnings release.

Earnings Beat Meets Capex Concerns

Microsoft reported Q2 results that exceeded market expectations. Earnings per share stood at USD 4.14, compared with a consensus estimate of USD 3.86. Revenue for the quarter came in at USD 81.27B, ahead of forecasts of USD 80.28B. Azure and cloud-related businesses continued to contribute meaningfully, recording year-on-year growth of around 39%. Revenue linked to partnerships with OpenAI also supported overall performance.

Despite the earnings beat, investor focus shifted toward the company’s spending profile. Microsoft disclosed AI-related infrastructure capital expenditure of approximately USD 37.5B, raising questions around near-term free cash flow and margin trends. Additionally, indications of a moderation in Azure growth contributed to cautious market reactions.

Insider Activity and Recent Performance

Over the past three months, insider selling activity totaled about 54,100 shares, with a combined value of roughly USD 27.6M. While insider transactions form part of routine disclosures, the timing coincided with increased scrutiny of valuation and investment intensity.

The stock’s recent decline places it notably below levels seen earlier in the month, marking one of its sharpest single-day percentage drops in recent periods.

Broker View Remains Largely Constructive

According to Refinitiv data, analysts covering Microsoft Corp largely continue to maintain BUY or OUTPERFORM ratings. Brokerages including CMB International, Haitong International, William Blair, and TD Cowen have reiterated confidence in the company’s long-term business model.

The current consensus target price range stands between USD 530 and USD 635, indicating an implied upside of roughly 22% to 46% from the latest closing price, despite the recent volatility.

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