Microsoft Takes a Hit as Wall Street Slashes Software Outlook Amid Economic Jitters

BofA trims estimates for over 50 software companies, warning of a cloudy horizon for the tech sector in 2025

A new client note from BofA Securities landed Tuesday, and it didn’t pull any punches. The Wall Street firm lowered price targets on Microsoft and more than 50 other software stocks, flagging growing concerns about a murky macroeconomic environment through the rest of 2025.

The signal from analysts: first-quarter numbers might look fine, but what’s ahead is giving them pause. And when it comes to the software sector, even a breeze of uncertainty can send stocks wobbling.

A Not-So-Subtle Warning for Tech Bulls

“We are lowering revenue and operating income estimates across the software group to reflect heightened macro uncertainty,” the note said. In simple terms: they expect storm clouds ahead, even if we’re not in a full-on downpour just yet.

Interestingly, BofA’s team isn’t forecasting a recession. Not right now, anyway. But they do think companies—especially in the software space—will need to get real about their Q2 and full-year expectations.

One sentence stood out: “We expect management teams to lower the outlook for Q2 and the remainder of calendar 2025 on a constant currency basis to reflect added uncertainty.”

Microsoft Still a Buy, But With Less Shine

Microsoft wasn’t spared. Its stock target was trimmed from $510 to $480.

Brad Sills, the analyst behind the call, stuck to his “buy” rating. But the message is clear: even Big Tech can’t ignore macro headwinds forever.

Microsoft’s stock slipped 0.5% on Tuesday, closing at $385.73. Not a huge drop, but enough to show investors are listening. Especially with its next earnings report set for April 30.

Here’s the kicker: the actual first-quarter numbers probably won’t look bad. Tariff-related stress didn’t start hitting until April. But investors aren’t really focused on what was. They’re asking what’s next.

That’s Microsoft’s cloud computing crown jewel. And when earnings land at the end of this month, you can bet analysts will be dissecting Azure’s revenue guidance like it’s a crystal ball.

Other Names on the Chopping Block

Microsoft wasn’t the only name on the list.

Adobe and Intuit also saw price target downgrades. Sills kept buy ratings on both, but his tone? A little less bullish than before.

The move reflects a broader chill. Software, once a safe haven, is now facing a double whammy:

Slower enterprise spending
Uncertainty around global tariffs and currency volatility

Those two things can mess with forecasts, especially for firms that depend on subscription-based models and global clients.

To make matters more tangible, here’s a quick look at the software sector sentiment as of April 15:

Company	Previous Target	New Target	Rating
Microsoft	$510	$480	Buy
Adobe	$675	$630	Buy
Intuit	$730	$695	Buy

The takeaway? Investors still believe in these giants, but they’re less giddy than before.

Don’t Panic, But Stay Sharp

Let’s be clear: this isn’t a meltdown. It’s not 2008. Heck, it’s not even 2022.

Sills and his team made a point to say that Q1 earnings likely won’t reflect the macro turbulence. That’s coming later.

Because in investing, expectations matter just as much—if not more—than results. And right now, expectations are getting a haircut.

Even without a formal recession forecast, there’s a growing sense that companies may start to “underpromise,” hedging their bets in case things get worse. And that can shake investor confidence faster than any earnings miss.

One sentence, buried in the note, says it all: “Management teams will likely turn more cautious in forward-looking commentary.”

Tariffs, Currency Swings, and the Wild Card Ahead

One more layer of complexity? The unpredictable nature of global tariffs and foreign exchange rates.

Tariffs haven’t fully landed in the earnings data yet, but they’re on everyone’s radar. And with the dollar still moving against other major currencies, constant-currency guidance is becoming a make-or-break metric for Wall Street watchers.

Here’s the thing—cloud-based software companies like Microsoft and Adobe rely heavily on global revenues. So a strong dollar, or escalating trade friction, can throw a wrench into what otherwise looks like solid growth.

Plus, there’s the elephant in the room: geopolitical tensions and U.S. election-year volatility. All of it adds noise.

Sills didn’t explicitly mention the political backdrop, but the undertone was hard to miss. Companies aren’t operating in a vacuum, and 2025 isn’t shaping up to be a quiet year.

One sentence is enough for this whole paragraph.