Melius Research downgraded Microsoft from buy to hold on February 9, 2026. The firm established a new price target of $430 for the stock.
Analysts cited concerns that escalating capital expenditures in the artificial intelligence sector could negatively impact free cash flow. Melius identified an intense AI arms race as a primary factor, noting the massive investment required to maintain a competitive edge.
Microsoft shares rose approximately 0.66% to around $403.77 following the announcement. The market reaction suggests investors are weighing long-term AI growth potential against near-term pressure on the company's cash reserves.