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Microsoft (MSFT+1.86%) stock fell more than 5% in afternoon trading certainty, with Amazon (AMZN+1.90%) and the other Magnificent 7 shares also losing ground as investors continued to reassess the fallout from this week’s abrupt tariff pause — and its likely ripple effects across corporate IT spending.
Adding to the pressure, Wedbush Securities cut its 12-month price target for Microsoft stock by almost 14%, from $550 per share to $475. Wedbush warned that economic whiplash and tariff turmoil were putting enterprise tech budgets on ice, especially for big-ticket cloud and AI projects.
The influential investment firm maintained its Outperform rating on Microsoft stock but said the “tariff game of poker” unfolding in Washington has already “created real damage to the corporate spending mentality.” Microsoft, with deep exposure to AI and cloud infrastructure, is likely to feel that demand-side chill first.
‘Economic Twilight Zone’ still front and center
Wedbush analysts described the past week as an “economic Twilight Zone” after President Donald Trump announced sweeping tariffs — then abruptly paused them for 90 days. While the temporary truce offered short-term relief, Wedbush emphasized that “thinking this tariff issue is now done is the wrong view,” arguing that the true impact on enterprise budgets and IT roadmaps will begin to emerge in second-quarter tech earnings.
In one of its most pointed warnings, Wedbush called the tariffs “a negotiation tactic for Trump,” but said the gamble could have real and lasting consequences: “The impacts and gamble to the real economy are a snowball that once it starts rolling downhill it cannot be just stopped...and investors will see that front and center during earnings season for tech kicking off in the next few weeks.”
Wedbush estimates that 10% to 15% of cloud and AI initiatives across U.S. enterprises could be pushed out amid the current economic uncertainty — potentially dragging down growth in Microsoft’s Azure and AI-linked revenue through the summer.
Q2 as a mulligan?
Investors, Wedbush suggested, may need to write off the current quarter as a “mulligan” for Microsoft and other major tech firms. While remaining bullish on Microsoft, Wedbush advised that, “Investors will need to buckle the seat belt and look past the next few quarters of choppiness — and hold the tech winners through the storm.”