STORY: Shares of Microsoft slid more than 5% in early trading on Wednesday, underperforming its Big Tech peers after the stock got a downgrade from UBS.
The brokerage warned Microsoft could see slowing growth for its cloud services and Office suite software.
After years of rapid growth in the cloud business that made Microsoft an investor darling, the software giant is now battling lower spending by businesses amid rising borrowing costs.
UBS lowered its rating on the stock to "neutral" from "buy" and its lead analyst said Microsoft's cloud unit "is entering a steep growth deceleration that could prove to be worse in FY23/FY24 than investors are modeling."
The analyst added that companies cutting spending and slashing jobs could also weigh on Microsoft's Office 365 business this year.
The news sent Microsoft shares to a near two-month low on Wednesday, making it the biggest loser on the S&P 500.
The stock had lost 29% of its value in 2022, but outperformed Big Tech peers such as Google-parent Alphabet and Amazon.
Shares of Amazon were also down on Wednesday after UBS lowered the price target on the stock, citing similar concerns over slowing cloud growth.