A Barclays analyst views the job cuts to be "additive" to margins in the fiscal year 2026.

Microsoft Corp. (MSFT) defied the tech sector rally on Tuesday and ended the session modestly lower after traders reacted to a report regarding 3% job cuts by the company. 

The company has since then confirmed the news to several media outlets, stating, "We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace."

A sell-side analyst, however, cheered the development.

The Fly reported that a Barclays analyst views the move as a "commitment to profitable growth," especially as artificial intelligence (AI) infrastructure costs continue to ramp up in the medium term.

The analyst noted that the company recently maintained its 2025 operating margin even before these actions. He views the job cuts to be "additive" to margins in the fiscal year 2026.

Barclays has an 'Overweight' rating and $494 price target for Microsoft stock.

On Stocktwits, retail sentiment toward the Microsoft stock was 'neutral' (45/100) by late Tuesday, and the message volume on the stream was 'low.'

MSFT sentiment and message volume as of 2:57 a.m. ET, May 14 | source: Stocktwits

A bullish user said the stock could take off after a recent consolidation phase.

Another user said the Microsoft stock has risen too fast and by much, potentially referring to the post-earnings rally. "I've got a hunch this dips soon," they said.

Microsoft stock has rallied nearly 14% since April 30 when it reported a strong third-quarter beat and issued positive guidance. The Koyfin-compiled consensus price target for the Microsoft stock is $506.17, implying scope for roughly 13% upside from current levels.

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