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Key Points
- The Gates Foundation sold roughly 65% of its MSFT stake, but analysts see strategic rebalancing—not declining confidence.
- MSFT trades at 36x forward earnings with strong AI infrastructure positioning and a 32% upside forecast based on analyst targets.
- Technical indicators show near-term consolidation, but long-term momentum remains bullish with support near the 50-day SMA.
Microsoft Corp. (NASDAQ: MSFT) faced renewed scrutiny in late November 2024 when the Gates Foundation disclosed the sale of approximately 17 million shares—around 65% of its MSFT stock holding—as revealed in its third-quarter 13F-HR filing.
Insider selling generally draws a significant negative reaction from investors, but this move is different. The Gates Foundation has long held MSFT as its largest position, largely due to legacy stock gifts from Bill Gates.
In November 2024, the foundation's stake was worth approximately $14 billion, accounting for nearly one-third of its portfolio.
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Sale Follows Historical Pattern, but Magnitude Raises Eyebrows
The first thing that investors need to note is that the Gates Foundation regularly trims its MSFT stock position. In fact, the trust has been a net seller of Microsoft, selling part of its position every quarter since the end of 2023.
However, it's the size of this trade that is drawing attention. For now, analysts believe this is part of a strategic move by the foundation to rebalance its portfolio and provide liquidity.
The foundation plans to ramp up its annual grantmaking to $9 billion in 2026 with the intention to spend down its full endowment by 2045. That long-term commitment means minimizing concentration risk from single-stock exposure makes financial sense.
No Signs of an AI-Driven Exit Strategy
Some investors are framing the move as a signal that the Gates Foundation wants to exit before a potential AI bubble bursts.
But that narrative doesn't hold up under scrutiny. There's no evidence that the trust managing the foundation's assets is timing the AI cycle. Instead, the sale appears purely operational and consistent with the foundation's financial objectives.
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Microsoft Stock Still Shows Strong Technical and Fundamental Support
From a technical standpoint, MSFT stock is undergoing ahealthy pullback, down roughly 12% from its late October high. The stock is approaching its 50-day simple moving average (SMA), which could serve as a key area of support.
However, there may be more selling in the short term. The weekly moving average convergence divergence (MACD) shows a bearish crossover. The current histogram is firmly negative, signaling stalled upside momentum that favors further consolidation in the near term.
With many investors concerned about the lofty valuations in technology stocks, it's worth noting that MSFT stock is trading at around 36x forward earnings, only a slight premium to its historical average. Perhaps more concerning is its price-to-sales (P/S) ratio of 12x, which is a level not seen since the dot-com bubble over 20 years ago.
But that hasn't dampened the bullish sentiment of analysts who identify a consensus price target of $634.33 on MSFT stock. That's 32% in potential upside. Some analysts have much higher targets, including DA Davidson and Jefferies, which reiterated their price targets at $650 and $675, respectively.
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