Stifel analysts reduced their price target for Microsoft (MSFT, Financials) to $475 from $515 while maintaining a Buy rating. The adjustment follows discussions with Microsoft's investor relations team, with analysts noting a shift in focus toward capital expenditure efficiency rather than generative artificial intelligence growth.

• Warning! GuruFocus has detected 2 Warning Sign with MSFT.

Microsoft shares traded at $379.43 as of 2:12 p.m. GMT-4 on Monday, down $13.88, or 3.5%, from the previous close.

Forecasting to surpass $87 billion, a 55% increase from the previous year, the corporation confirmed its fiscal 2025 capital spending projection. Rising 157% in December, Microsoft's Azure generative AI income runs at $10 billion. In keeping with Azure's growth, analysts estimate incremental capital expenditures for fiscal 2026 of $25 billion to $30 billion.

Stifel analysts said capital intensity issues might keep Microsoft shares range-bound until Azure and Commercial Cloud revenue growth outpaces expenditure increases.

Relatedly, OpenAI has started releasing GPT-4.5 for Plus-tier members; a larger artificial general intelligence announcement is due this year. Microsoft also cautioned about possible cyber risks from the Chinese espionage organization Silk Typhoon aiming at cloud and IT supply chains and revealed a $300 million AI infrastructure investment in South Africa. The UK Competition and Markets Authority decided meantime that Microsoft's alliance with OpenAI did not call for further inquiry.

Though short-term capital spending questions may affect stock performance, Microsoft's AI and cloud development remain significant drivers of growth.