Rothschild & Co Redburn Downgrades Microsoft Corporation (MSFT) to Hold, Lowers PT

​Microsoft Corporation (NASDAQ:MSFT) is one of the Most Profitable Stocks to Buy Now. On November 18, Alexander Haissl from Rothschild & Co Redburn downgraded Microsoft Corporation (NASDAQ:MSFT) from Buy to Hold and also reduced the price target on the stock from $560 to $500. On the same day, Gregg Moskowitz from Mizuho Securities also downgraded the stock from Buy to Hold, without disclosing any price targets.

​Alexander Haissl from Rothschild & Co Redburn commented in a research note that the underlying economies of hyperscalers are far weaker than anticipated, which suggests that it is time to take a more cautious stance. He highlighted that the deployment of Graphics Processing Units needs almost six times the capital to generate the same cloud 1.0 value, along with the associated downside risks.

​Haissl added that investors are giving too much benefit of the doubt to the hyperscalers. He noted the valuations of these companies are high, as if they have already delivered cloud 1.0 level returns. In reality, the economies suggest no clear path for return on these investments. Therefore, the analyst expects lower earnings and higher capital expenditure for Microsoft Corporation (NASDAQ:MSFT) to sustain its growth.

​On the other hand, Microsoft Corporation (NASDAQ:MSFT) topped estimates during its fiscal Q1 2026 results, announced on October 29. The company grew its revenue by 18.43% year-over-year to $77.67 billion, surpassing estimates by $2.28 billion. Moreover, the EPS of $4.13 also came in ahead of the expectation by $0.47. Management attributed revenue growth to Microsoft Cloud revenue, which grew 26% to $49.1 billion, exceeding expectations. This was supported by Productivity and Business Processes revenue, which grew 17% year-over-year to $33 billion.

​​Microsoft Corporation (NASDAQ:MSFT) is a leading technology company known for a wide range of devices, software, and services. Some of the core offerings by the company include productivity software, including Microsoft Office and Azure, the Windows operating system, and gaming devices.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.