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• D.A. Davidson analyst upgraded Microsoft to “Buy” with a $450 price target
• Microsoft shares down 10% in 2025 but outperforming broader tech sector
• Company expected to post $3.20 EPS, representing 8.84% year-over-year growth
• Analysts view Microsoft as less vulnerable to consumer spending slowdown
• Tech giant trades at forward P/E of 29.09, slightly above industry average of 25.74

Microsoft (MSFT) received a notable vote of confidence from Wall Street this week. The upgrade highlights the tech giant’s potential resilience in an uncertain economic environment.

Analyst Gil Luria of D.A. Davidson raised Microsoft from “Neutral” to “Buy” on Wednesday. The new price target of $450 suggests potential upside of more than 17% from current levels.

The upgrade comes at a time when many investors are concerned about consumer spending. Luria specifically cited Microsoft’s limited consumer exposure as a key advantage.

According to the analyst, Microsoft has the second-lowest consumer exposure among major tech companies. Only Nvidia has less consumer-facing business in the analyst’s view.

This positioning contrasts with other tech giants like Amazon, Alphabet, Apple, and Meta. All these companies could face greater headwinds if consumer spending weakens.

Microsoft shares have struggled in 2025, falling approximately 10% year-to-date. The decline followed disappointing guidance issued in late January.
 

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Microsoft Corporation (MSFT)

Despite this pullback, Microsoft has shown stronger performance than its peers. The stock has fallen 7.53% over the past month, compared to a 12.07% drop in the broader tech sector.

The S&P 500 index declined 8.15% during the same period. This relative outperformance supports the analyst’s view of Microsoft as a “shelter in the storm.”

Microsoft gained 0.76% in Wednesday’s trading session, closing at $383.34. This beat the S&P 500’s 0.49% gain and came as the Dow Jones Industrial Average fell 0.2%.

Earnings Report

Investors are closely watching Microsoft’s upcoming earnings report. Analysts expect earnings per share of $3.20, which would represent growth of 8.84% from the year-ago quarter.

Revenue is projected to reach $68.37 billion, showing 10.52% year-over-year growth. For the full fiscal year, consensus estimates call for earnings of $13.08 per share.

Annual revenue is expected to hit $276.15 billion. These figures would represent annual growth of 10.85% in earnings and 12.66% in revenue.

Capital expenditure has become a major focus for investors in Microsoft and other tech companies. Many wonder how much of the massive AI spending will generate future returns.

Microsoft currently trades at a forward P/E ratio of 29.09. This represents a slight premium to the Computer-Software industry average of 25.74.

The company’s PEG ratio stands at 2.02, roughly in line with the industry average of 2.05. This metric takes into account the company’s expected growth rate.

Sentiment

Analyst sentiment toward Microsoft has been modestly positive. The consensus EPS estimate has moved 0.09% higher over the past month.

Microsoft currently holds a Zacks Rank of #3, equivalent to a “Hold” rating. The Computer-Software industry ranks in the top 29% of all industries tracked.

Microsoft stock edged lower in pre-market trading on Thursday, down 0.2%. By comparison, futures for the tech-heavy Nasdaq 100 fell 0.5%.

The recent upgrade suggests some analysts are becoming more optimistic about Microsoft’s prospects. The company’s enterprise-focused business model could provide some insulation from consumer-spending concerns.

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