Microsoft Corp's (NASDAQ:MSFT) shares may have weathered recent volatility better than some of its peers, but analysts at Wedbush are no longer quite as bullish on the tech giant’s near-term prospects.
In a note to clients, the broker cut its 12-month price target for the stock from $550 to $475, citing growing uncertainty around US trade policy and its potential knock-on effect on corporate spending.
The downgrade follows a turbulent period in markets, after President Donald Trump unveiled a sweeping slate of tariffs on Chinese imports, only to partially walk them back under pressure from bond markets.
Wedbush analyst Dan Ives described the developments as an “economic Twilight Zone”, warning the stop-start nature of tariff decisions had already shaken confidence among corporate IT buyers.
In the heart of the storm
Microsoft, Ives argues, is at the heart of this storm. Although the brokerage maintains its ‘outperform’ rating and long-term positive view on the stock, it expects a material near-term slowdown in tech spending.
Wedbush has trimmed its forecasts for the company’s June quarter and full-year 2026, reflecting what it sees as a pause in capital expenditure across key enterprise clients.
Microsoft’s own exposure to hardware and services reliant on Chinese supply chains places it front and centre in the tariff debate.
According to the tech-focused investment bank, between 10% and 15% of US cloud and artificial intelligence projects could be delayed as executives hit the brakes to wait for more clarity.
Hesitation
Some of this hesitation, the report suggests, will be visible in Microsoft’s upcoming earnings. For now, Wedbush sees the company’s full-year revenue landing at $272.7 billion, down from an earlier forecast of $278.2 billion. Forecast earnings per share for 2025 have also been shaved to $12.89 from $13.19.
Still, Ives is not throwing in the towel. The report singles out Microsoft’s cloud business, Azure, as a long-term winner in the ongoing race to embed AI into corporate infrastructure.
He estimates that for every $100 companies spend on Azure, around $40 will now be allocated to AI, pointing to what Ives calls a “transformational opportunity” for Microsoft and its customers.
'Mulligan' quarter
That said, the June quarter may be a “mulligan”, as Ives puts it, a round investors choose to overlook.
Wedbush is telling clients to expect slower deal activity, limited forward guidance, and growing caution from chief information officers trying to make sense of evolving trade policies.
Even so, the analysts urge investors to stay the course. They argue that Microsoft, along with a handful of other “tech winners,” remains well positioned to lead the sector once the dust settles.
But in the meantime, there will likely be more bumps along the road. As trade tensions play out and spending plans remain on hold, Microsoft’s short-term path may prove as complex as the politics shaping it.