Valuation pains in the wave of AI? Mizuho "slashes three times": lowers target prices for Atlassian (TEAM.US), Cloudflare (NET.US), and Microsoft Corporation (MSFT.US)

On Wednesday, the investment firm Mizuho Securities lowered the target stock prices for several technology companies, making Atlassian (TEAM.US), Cloudflare (NET.US), and Microsoft Corporation (MSFT.US) the focus of the market. Mizuho lowered Atlassian's target price from $245 to $225, Cloudflare's target price from $280 to $255, and Microsoft Corporation's target price from $640 to $620. The firm maintained an "outperform" rating for these three companies. Analyst Gregg Moskowitz stated in a client report, "Our market research in the fourth quarter overall showed solid performance. Public cloud/consumer data points were generally good, and demand for AI applications remains very strong. Network security demand is healthy, and the SaaS sector also showed resilience. However, it should be noted that some research indicates a slight easing in year-end budget releases compared to usual. In addition, investors' continued concerns about industry disruption caused by AI continue to suppress the valuation multiples of many software companies, with the SaaS sector particularly affected." Moskowitz further analyzed, "From a valuation perspective, the enterprise value-to-sales multiple for the next twelve months is 55% lower than the five-year peak and 30% lower than the average level. We believe the risk-return ratio for the next twelve months is attractive, but higher uncertainty may bring unusual challenges and volatility." The firm stated that, overall, the stocks they are most bullish on before the earnings season are Atlassian and Microsoft Corporation.