Figma Shares Continue Decline Amid AI Disruption Fears
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy MSFT?
Source: Fool
- Significant Price Drop: Figma's stock fell 31% last month, driven by escalating fears that AI could disrupt design software, leading to a decline in investor confidence despite the absence of company-specific negative news.
- Sector Pressure Intensifies: The sharp declines in shares of SaaS leaders like Microsoft, ServiceNow, and SAP after their earnings reports at the end of the month have also impacted Figma, indicating that the challenges are sector-wide rather than isolated to Figma.
- Analyst Rating Changes: Despite the pressure on Figma's stock, most Wall Street analysts maintain a bullish outlook, with Wells Fargo upgrading the stock to overweight, asserting that its leadership in product design and efficient growth merits a premium valuation.
- Future Outlook: Figma currently trades at 12 times sales, down over a third from its IPO price, with analysts expecting fourth-quarter revenue of $293.2 million and adjusted earnings per share of $0.06, suggesting that the company's fundamentals remain strong.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for MSFT is 631.36 USD with a low forecast of 500.00 USD and a high forecast of 678.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 423.370
Low
500.00
Averages
631.36
High
678.00
Current: 423.370
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- OpenAI Investment Upside: Holding a 27% stake in OpenAI, Microsoft stands to gain significantly if OpenAI proceeds with an IPO later this year, allowing the company to potentially cash out at an advantageous time and strengthen its market position.
- Attractive Valuation: Following a 10% drop in stock price, Microsoft now trades at less than 26 times forward earnings, a rare discount over the past three years, presenting a compelling buying opportunity for investors anticipating robust future growth.
- Future Growth Potential: With $625 billion in remaining performance obligations in its Azure business, Microsoft has substantial growth prospects in the ongoing AI race, making it a key reason to hold the stock over the next five years.
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- Analyst Insights: Analysts from Fool.com suggest that the stock drop may be linked to uncertainties in the overall economic environment, leading investors to adopt a cautious stance amid potential risks.
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Figma Shares Continue Decline Amid AI Disruption Fears
- Significant Price Drop: Figma's stock fell 31% last month, driven by escalating fears that AI could disrupt design software, leading to a decline in investor confidence despite the absence of company-specific negative news.
- Sector Pressure Intensifies: The sharp declines in shares of SaaS leaders like Microsoft, ServiceNow, and SAP after their earnings reports at the end of the month have also impacted Figma, indicating that the challenges are sector-wide rather than isolated to Figma.
- Analyst Rating Changes: Despite the pressure on Figma's stock, most Wall Street analysts maintain a bullish outlook, with Wells Fargo upgrading the stock to overweight, asserting that its leadership in product design and efficient growth merits a premium valuation.
- Future Outlook: Figma currently trades at 12 times sales, down over a third from its IPO price, with analysts expecting fourth-quarter revenue of $293.2 million and adjusted earnings per share of $0.06, suggesting that the company's fundamentals remain strong.
See More
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- Cloud Growth Slowdown: Microsoft's latest earnings report reveals a slowdown in cloud growth, leading to a 2.86% drop in stock price, which raises concerns about future growth prospects and may undermine investor confidence.
- Surge in AI Infrastructure Spending: The company has significantly increased capital expenditures on AI infrastructure; while the AI market holds great potential, such high spending could compress profit margins and affect overall financial performance.
- Competitive Innovation Threat: AI startup Anthropic's Claude Code achieved a $1 billion revenue run rate in just six months, highlighting the competitive pressure on Microsoft in the AI space and prompting a reassessment of its product strategy.
- Low User Adoption Rates: Despite Microsoft 365 Copilot having 15 million paid seats, only 3% of commercial customers are willing to pay for AI tools compared to a total of 450 million users, indicating low market acceptance of its AI offerings, which could impact future revenue growth.
See More
Microsoft's Cloud Revenue Growth and Investment Opportunities
- Cloud Revenue Growth: Microsoft's Azure cloud computing division reported a 39% year-over-year revenue increase in Q2, surpassing management's guidance of 37%, indicating strong benefits from AI spending and potential for stock price appreciation.
- OpenAI Investment Upside: Holding a 27% stake in OpenAI, Microsoft stands to gain significantly if OpenAI proceeds with an IPO later this year, allowing the company to potentially cash out at an advantageous time and strengthen its market position.
- Attractive Valuation: Following a 10% drop in stock price, Microsoft now trades at less than 26 times forward earnings, a rare discount over the past three years, presenting a compelling buying opportunity for investors anticipating robust future growth.
- Future Growth Potential: With $625 billion in remaining performance obligations in its Azure business, Microsoft has substantial growth prospects in the ongoing AI race, making it a key reason to hold the stock over the next five years.
See More
Microsoft Reports Strong Q4 Earnings but Stock Declines
- Earnings Beat: Microsoft reported its fourth-quarter earnings, surpassing both revenue and profit expectations, indicating the company's strong performance in the tech sector; however, the stock price fell significantly post-report.
- Stock Reaction: Despite the positive earnings report, Microsoft's stock experienced a notable decline, reflecting investor concerns about future growth, which could impact market confidence in the short term.
- Analyst Insights: Analysts from Fool.com suggest that the stock drop may be linked to uncertainties in the overall economic environment, leading investors to adopt a cautious stance amid potential risks.
- Future Outlook: Although the current stock decline is concerning, analysts remain optimistic about Microsoft's long-term growth potential, believing that the company's investments in cloud computing and artificial intelligence will support future performance.
See More
Microsoft Struggles with AI Sales as Anthropic Emerges
- AI Sales Struggles: Microsoft faces a dismal 3% adoption rate for its AI products among commercial customers, with only 15 million out of 450 million Microsoft 365 paid users willing to pay for AI tools, indicating a significant disconnect between product offerings and market needs, necessitating a strategic overhaul.
- Anthropic's Rapid Rise: AI startup Anthropic's Claude Code achieved a remarkable $1 billion revenue run rate in just six months, and its new Cowork product automates various computer tasks, highlighting a strong market demand for efficient AI tools that poses direct competition to Microsoft.
- Investor Confidence Shaken: Following Microsoft's latest earnings report, its shares plummeted as investors expressed concerns over slowing cloud growth and soaring AI infrastructure expenditures, with nearly half of its backlog tied to OpenAI, intensifying scrutiny over its AI strategy.
- Shifting Market Demands: The emergence of innovative products like Anthropic Cowork underscores a growing market demand for genuinely useful AI tools, and if Microsoft fails to swiftly adjust its AI strategy to develop solutions that address customer pain points, it risks becoming obsolete in the competitive landscape.
See More
Musk: College Skills May Not Be Necessary in Future Due to AI Revolution
- Necessity of College Education: Musk stated on a podcast that the skills taught in college may become unnecessary due to the AI revolution, although he acknowledges that college can help develop social skills.
- Future of Skills: He mentioned that many skills might become 'useless' with the rise of AI and encouraged students to learn broadly in college to adapt to future changes.
- Impact of AI on Employment: According to workforce consulting firm Challenger Gray & Christmas, approximately 55,000 layoffs last year were attributed to AI, highlighting the profound impact of technology on the labor market.
- Potential Risks of AI: Musk warned that artificial intelligence could be destructive, especially if humans force it to accept lies, emphasizing the importance of ensuring AI seeks truth to avoid negative outcomes.
See More
Figma Shares Continue Decline Amid AI Disruption Fears
- Significant Price Drop: Figma's stock fell 31% last month, driven by escalating fears that AI could disrupt design software, leading to a decline in investor confidence despite the absence of company-specific negative news.
- Sector Pressure Intensifies: The sharp declines in shares of SaaS leaders like Microsoft, ServiceNow, and SAP after their earnings reports at the end of the month have also impacted Figma, indicating that the challenges are sector-wide rather than isolated to Figma.
- Analyst Rating Changes: Despite the pressure on Figma's stock, most Wall Street analysts maintain a bullish outlook, with Wells Fargo upgrading the stock to overweight, asserting that its leadership in product design and efficient growth merits a premium valuation.
- Future Outlook: Figma currently trades at 12 times sales, down over a third from its IPO price, with analysts expecting fourth-quarter revenue of $293.2 million and adjusted earnings per share of $0.06, suggesting that the company's fundamentals remain strong.
See More
Microsoft Shares Plunge Amid Cloud Growth Concerns and AI Strategy Flaws
- Cloud Growth Slowdown: Microsoft's latest earnings report reveals a slowdown in cloud growth, leading to a 2.86% drop in stock price, which raises concerns about future growth prospects and may undermine investor confidence.
- Surge in AI Infrastructure Spending: The company has significantly increased capital expenditures on AI infrastructure; while the AI market holds great potential, such high spending could compress profit margins and affect overall financial performance.
- Competitive Innovation Threat: AI startup Anthropic's Claude Code achieved a $1 billion revenue run rate in just six months, highlighting the competitive pressure on Microsoft in the AI space and prompting a reassessment of its product strategy.
- Low User Adoption Rates: Despite Microsoft 365 Copilot having 15 million paid seats, only 3% of commercial customers are willing to pay for AI tools compared to a total of 450 million users, indicating low market acceptance of its AI offerings, which could impact future revenue growth.
See More
