The kickoff of a high-profile antitrust case against a peer and an analyst’s price target reduction put the hurt on Microsoft (MSFT -2.55%) shares Monday. The tech giant wasn’t looking all that mighty on the exchange, with a more than 3% drop in price in late afternoon trading.
A big peer’s day in court
It was generally a bearish day for big tech as a whole, with search titan Alphabet taking an uncomfortable turn in the spotlight.
The U.S. Department of Justice’s artificial intelligence (AI)-related suit against the company began. The government agency claimed that strong legal measures are needed to prevent the company from using AI functionalities to make it even more dominant in search.
Alphabet, whose core asset is its familiar search engine Google, has landed in hot legal water before, but the DOJ seems particularly determined this time to cut the company down to size. Officials have repeatedly, and at times strongly, criticized the veteran tech powerhouse for its business practices and near-unassailable position.
Potentially under fire?
They’ve made similar pronouncements about Microsoft, which not long ago faced accusations of monopolist practices with its ubiquitous Windows operating system. The company is heavily invested in leading AI developer OpenAI, and as such looks like a juicy target for antitrust actions related to the technology.
Compounding that, the company earned a price target cut from a pundit tracking its fortunes. Monday morning Barclays‘ Raimo Lenschow cut the bank’s fair value assessment to $430 per share from his previous $475. That doesn’t (yet) make him a bear on the stock, as he maintained his overweight (i.e., buy) recommendation.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Microsoft. The Motley Fool recommends Barclays Plc and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.