Investors Weren't Happy With These 2 Tech Stocks Wednesday

The stock market rebounded on Wednesday from its losses the previous day, with investors taking the release of minutes from the latest Federal Reserve meeting in stride. Even as the central bank's policymakers emphasized that they would remain vigilant in their fight against inflation, the S&P 500 (^GSPC 1.07%) led markets higher, with gains for the Nasdaq Composite (^IXIC 2.02%) and Dow Jones Industrial Average (^DJI 0.28%) as well.

Data source: Yahoo! Finance.

Yet even on a fairly positive day for the market as a whole, some individual stocks didn't get the love from Wall Street that their shareholders had hoped to see. Declines for Microsoft (MSFT 2.73%) and ZoomInfo Technologies (ZI 3.98%) followed comments from stock analysts that called into question whether bullish sentiment is justified for these two tech stocks in 2023.

Microsoft deals with a cloudy outlook

Shares of Microsoft finished the session down 4.5%. The tech giant had to deal with negative comments from a prominent financial institution, with much of their focus pointing to what has previously been a high-growth area for Microsoft.

Analysts at UBS downgraded their rating on Microsoft from buy to neutral, and they cut their price target on the stock by $50 per share to $250 per share. The comments from UBS noted that they're anticipating weaker performance from cloud services providers in 2023, and that could weigh particularly heavily on Microsoft's Azure cloud unit. Importantly, weakness in Azure could stem not just from deteriorating macroeconomic conditions but also from company-specific issues as Microsoft's cloud platform matures.

In addition, UBS believes that revenues from the key Office productivity software suite could grow more slowly in the coming year. During the early years of the COVID-19 pandemic, the need for remote work led to stronger sales of Office, but as that trend has waned, an inevitable slowdown appears to be coming.

2022 wasn't the best of years for Microsoft, and investors had hoped the software giant would turn over a new leaf with the change in the calendar. If UBS is right, though, that might not happen as quickly as many had hoped.

ZoomInfo gets an onslaught of negative comments

Meanwhile, shares of ZoomInfo Technologies dropped by 6%. The sales-prospect-targeting software provider faced downbeat comments from several analysts on Wednesday.

A couple of analysts made significant cuts to their price targets for ZoomInfo stock. At Mizuho, analysts reduced their price target by $5 per share to $45 per share, while Canaccord took its price target down from $48 per share to $43 per share. Both companies were content to leave their buy ratings unchanged, however, noting that longer-term trends still seem to favor the business.

BofA Securities analysts were a bit more severe, cutting their rating on ZoomInfo stock from buy to neutral. Those analysts already had a lower price target on the tech company than their peers, but made a token $1 per share cut to $34 per share. Even though BofA Securities still expressed confidence in ZoomInfo's software platform, near-term headwinds from longer sales cycles could keep hurting the stock.

ZoomInfo has had to deal with negative sentiment for more than a year now, despite seeing solid growth in revenue and adjusted profits. The share-price declines, however, make ZoomInfo stock look increasingly attractive if its business can withstand a macroeconomic slowdown.