Falling personal computer sales hurt PC exposure stocks such as the chipmaker. AMD (AMD) and Intel (INTC) with computer manufacturers Dell (DELL) and HP (HPQ). Now, Microsoft (MSFT) Stocks are in the crosshairs.
Software giant Microsoft could be “the next shoe to release,” Jordan Klein, managing director of commercial technology, media and telecoms at Mizuho Securities, said in a note to customers on Tuesday. weaker than last week I can see the increased revenue risks Microsoft faces in the coming quarters.”
The PC soft sale will hurt Microsoft’s Windows operating system business and possibly Office productivity software, Klein said, but the company’s continued strength in cloud computing businesses such as Azure could. It could help compensate for the PC’s weaknesses, he said.
on Tuesday Jefferies analyst Brent Thill lowered his price target on Microsoft shares to 275 from 300, but kept his buy rating.
Microsoft Stock Drops
“Microsoft is still a great franchise. But we are downgrading our estimates due to the increasing foreign exchange and PC issues and the potential for SMBs (small and medium-sized businesses) spreading to the enterprise,” Thill said in his note to clients.
On the stock market today, Microsoft shares fell 1.7 percent to close at 225.41.
On Thursday, AMD warned that Q3 sales were missed by weak PC demand. AMD said PC chip sales fell 40 percent year over year in the September quarter.
on Tuesday Market research firms Canalys, Gartner and IDC reported a decline in global PC shipments in the third quarter. Canalys caused a 17.7 percent year-over-year decline in units, Gartner expected a 19.5% drop and IDC pegged the reduction. Down at 15%, PC shipments have declined for four consecutive quarters, Gartner said.
Gartner analyst Mikako Kitagawa said, “This quarter’s earnings could be a historic slowdown for the PC market. “As supply chain disruptions have eased, But high inventory has become a major problem due to weak demand for PCs in both the consumer and business markets.”
PC sales forecasts fall
In a note sent to customers Sunday, investment bank Cowen lowered its PC sales forecast for this year and next. Cowen analysts saw PC sales fall 22% this year and 6% next year, previously forecasting a 9% drop in 2022 and a 3% drop in 2023.
“Our field work indicates there is no visual improvement for PC demand. PC ASP (average selling price) fluctuates initially lower in calendar Q4, and PC inventory is above pre-disease levels. Two months of epidemic,” said the Cowen analysts.
Weak PC demand and high inventory will continue to deter PC makers Dell and HP through at least the second quarter of 2023, they said.
Microsoft’s stock has recently outperformed the shares of PC makers and PC chip suppliers, but its relative strength score of 39 out of 99 is still poor.
Follow Patrick Seitz on Twitter at @IBD_Peitz For more stories on consumer technology, software and semiconductor stocks
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