Investors shifted their attention from long-term AI growth potential to the immediate costs of building the infrastructure needed to support it.
- Stifel cut its price target on MSFT, saying Wall Street may be overestimating Microsoft's fiscal 2027 margins.
- Palantir shares fell to a 52-week low of $106.38, extending a seven-day losing streak.
- Strategy shares extended their weekly loss to nearly 25% as investors grew concerned about its Bitcoin exposure.
Microsoft (MSFT), Palantir Technologies (PLTR) and Strategy (MSTR) stocks hit 52-week lows on Thursday as investors reassessed the financial burden of AI expansion and the risks tied to leveraged Bitcoin strategies.
Strategy stock closed down more than 9%, Palantir fell nearly 6%, and Microsoft closed down about 3% lower.
AI Spending Fuels Investor Concerns For MSFT
Microsoft’s stock hit a 52-week low of $349.20 on Thursday as investors reevaluated the financial impact of the company's aggressive artificial intelligence expansion and growing regulatory challenges in Europe.
Stifel reduced its price target on the software giant to $400 from $415 while maintaining a ‘Hold’ rating, saying its review of Microsoft's long-term outlook was influenced by the recent earnings report and gross margin guidance from Oracle (ORCL).
According to the firm, current forecasts for Microsoft's fiscal 2027 gross margins may be too optimistic as rising cloud and AI investment costs continue to weigh on profitability.
Also, Microsoft faces increasing regulatory pressure overseas as the European Union antitrust officials issued a preliminary finding that Azure should be classified as a "gatekeeper" under the Digital Markets Act.
However, on Stocktwits, retail sentiment around the stock jumped to ‘bullish’ from ‘bearish’ the previous day.
PLTR’s Valuation Premium Comes Under Pressure
Palantir Technologies’ stock hit a 52-week low of $106.38, extending its seven-session sell-off and heading for its worst week in over five years.
The latest weakness reflects growing skepticism over premium valuations in the enterprise AI software sector. As spending on AI infrastructure rises, investors seem to favor companies supplying chips, servers, and memory products over software providers that still face longer monetization timelines and slower enterprise adoption.
Palantir also faced added pressure after losing a legal case in a Zurich court involving Swiss investigative outlet Republik. The decision raised new questions about the company's ability to secure more government contracts in Europe, adding to concerns over its international growth prospects.
Despite the recent decline, Palantir continues to trade at a significantly higher forward earnings multiple of 120.6 than many software peers, according to Koyfin data. Retail sentiment around the stock remained in ‘bullish’ territory.
MSTR’s Bitcoin Bet Comes Under Pressure
Strategy stock suffered another steep decline on Thursday, falling to a fresh 52-week low of $85. The selloff extended a sharp weekly slump that erased nearly 25% of the stock's value as investors grew increasingly concerned about the company's financing model and Bitcoin exposure.
Strategy's preferred stock, an important source of funding for buying more Bitcoin, dropped well below its $100 face value after Bitcoin fell below $60,000. This raised concerns about whether the company can continue raising money through the same strategy to fund future Bitcoin purchases.
Retail sentiment for MSTR turned to ‘neutral’ from ‘extremely bullish’ territory the previous day.
So far this year, MSFT, PLTR and MSTR stocks have slumped 27%, 39% and 43%, respectively.
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