Microsoft Stock Slips Into Bear Market Territory as Analyst Upgrades To Buy

Microsoft's stock price (NASDAQ: MSFT) has tumbled into bear market territory, falling more than 20% from their 52-week highs, yet the steep decline has prompted analyst upgrades as Wall Street sees the pullback as a compelling entry point for one of technology's most dominant franchises.

The stock trades at $426.37, down 0.91% in pre-market activity, extending a brutal week that saw shares shed 7.48%. Despite the recent weakness, a growing chorus of analysts has moved to upgrade the software giant, citing attractive valuations and the company's commanding position in artificial intelligence and cloud computing.

Phillip Securities are the latest to upgrade the stock, lifting Microsoft from Accumulate to Buy whilst maintaining a $540 price target. The firm pointed to the stock's recent underperformance as creating a valuation opportunity that markets have been too quick to dismiss.

The analyst highlighted Microsoft's projected 16% year-over-year revenue growth in fiscal third quarter, underpinned by robust momentum across its commercial businesses. Azure, the company's cloud computing platform, is expected to deliver particularly strong results with projected growth of 37%, even as Microsoft continues to prioritize supply allocation amid demand that exceeds current capacity.

The disconnect between share price performance and analyst sentiment underscores a familiar dynamic in technology markets. Whilst near-term volatility has punished the stock, Wall Street's research community remains convinced that Microsoft's structural advantages in AI and cloud infrastructure position it to capitalize on secular growth trends that extend well beyond current market turbulence.

The bear market designation carries psychological weight, yet Microsoft's fundamentals appear largely intact despite a relatively disappointing earnings. The company continues to report double-digit revenue growth, maintains pricing power across its enterprise software suite, and has emerged as a frontrunner in the race to commercialize generative AI through its partnership with OpenAI and integration of AI capabilities across its product portfolio.

Price Targets

For markets, the question now centers on whether the recent selloff represents a temporary dislocation or signals deeper concerns about valuation multiples in the technology sector. The aggressive analyst upgrades suggest the former, with price targets ranging from $512 to $600 implying potential upside of 20% to 40% from current levels.