Why Microsoft Stock Was Getting Slammed Today
Microsoft's stock fell over 3% amid a bearish day for big tech, influenced by a high-profile antitrust case against Alphabet and a price target reduction by Barclays. The U.S. Department of Justice's lawsuit against Alphabet raises concerns for Microsoft, which has faced similar scrutiny due to its AI investments. Barclays analyst Raimo Lenschow lowered Microsoft's price target from $475 to $430 but maintained an overweight rating on the stock.
The kickoff of a high-profile antitrust case against a peer and an analyst's price target reduction put the hurt on Microsoft (MSFT -2.74%) shares Monday. The tech giant wasn't looking all that mighty on the exchange, with a more than 3% drop in price in late afternoon trading.
A big peer's day in court
It was generally a bearish day for big tech as a whole, with search titan Alphabet taking an uncomfortable turn in the spotlight.
The U.S. Department of Justice's artificial intelligence (AI)-related suit against the company began. The government agency claimed that strong legal measures are needed to prevent the company from using AI functionalities to make it even more dominant in search.
Alphabet, whose core asset is its familiar search engine Google, has landed in hot legal water before, but the DOJ seems particularly determined this time to cut the company down to size. Officials have repeatedly, and at times strongly, criticized the veteran tech powerhouse for its business practices and near-unassailable position.
Potentially under fire?
They've made similar pronouncements about Microsoft, which not long ago faced accusations of monopolist practices with its ubiquitous Windows operating system. The company is heavily invested in leading AI developer OpenAI, and as such looks like a juicy target for antitrust actions related to the technology.
Compounding that, the company earned a price target cut from a pundit tracking its fortunes. Monday morning Barclays' Raimo Lenschow cut the bank's fair value assessment to $430 per share from his previous $475. That doesn't (yet) make him a bear on the stock, as he maintained his overweight (i.e., buy) recommendation.