New York, February 11, 2026, 08:34 EST — Premarket
- Microsoft shares were little changed before the open after a fresh analyst downgrade.
- Wall Street focus stays on AI data-center spending and what it does to cash generation.
- Investors also have the U.S. January jobs report on their screens later Wednesday.
Microsoft Corporation shares edged down 0.1% in premarket trading on Wednesday to $413.27, keeping the stock pinned near recent lows as investors weigh new caution from Wall Street over the company’s AI-related spending.
Melius Research cut Microsoft to “hold” from “buy” and set a $430 price target, pointing to higher AI capital spending and the risk to cash flow, according to a Nasdaq.com report and Investing.com. Stifel analyst Brad Reback, who also downgraded the stock, said it was “time for a break,” the report said. (Nasdaq)
The drift in Microsoft came as U.S. stock futures inched higher ahead of the government’s January jobs report, a release that can swing expectations for Federal Reserve policy and, by extension, tech valuations. (AP News)
For Microsoft, the argument is messy and immediate: big checks for data centers and AI chips, then a wait for revenue to catch up. That timing gap is what downgrades keep circling.
On its January 28 earnings call, finance chief Amy Hood said capital expenditures were $37.5 billion, with roughly two-thirds tied to short-lived assets such as GPUs and CPUs used for AI computing. “Our customer demand continues to exceed our supply,” Hood said, and free cash flow — the cash left after capital spending — was $5.9 billion, down sequentially as cash capex rose. Chief executive Satya Nadella told investors to “think about M365 Copilot” alongside Azure when judging returns on that buildout. (Microsoft)
That pitch has not stopped the core question: how much of the new capacity turns into paying cloud work, and how much gets absorbed by Microsoft’s own AI products while margins get squeezed.
The stock’s sensitivity to the issue was on display after the company’s late-January update, when Microsoft dropped 10% in a single session, shedding more than $350 billion in market value as investors demanded clearer AI payoffs, Reuters reported. (Reuters)
There is also a competitive edge to the debate. Analysts have pointed to Alphabet’s Google and Amazon as benchmarks for the spending race, and for how quickly AI infrastructure turns into revenue that funds the next wave of capex.
But the downside case is straightforward. If enterprise spending cools, or if returns on AI tools show up slower than investors expect, the cash-flow pressure becomes harder to wave away. A firmer jobs print that pushes bond yields higher could also weigh on rate-sensitive software names.
Next up: Wednesday’s U.S. January jobs report, and whether it shifts the rate narrative that has been tugging at megacap tech — including Microsoft — into the next session.
