Investing.com -- Phillip Capital downgraded its ratings on both Spotify Technology (NYSE: SPOT ) and Microsoft Corp (NASDAQ: MSFT ). in separate notes Monday. citing strong recent share price performance that leaves limited room for further upside.

Microsoft was cut to Accumulate from Buy despite strong third-quarter earnings that were in line with expectations.

“3Q25 revenue/PATMI met our expectations at 74%/74% of our FY25e forecasts,” the firm wrote in a note, highlighting a 13% year-over-year increase in total revenue, driven by robust demand for Azure and cloud services.

Looking ahead, Microsoft expects 14% revenue growth in the fourth quarter, reaching $73.7 billion, with Azure revenue projected to rise 34.5% year-over-year and Office 365 commercial cloud revenue up 14%.

Phillip Capital maintained its FY25 estimates and a DCF-based target price of $480, noting that Microsoft is “well-positioned to benefit from the rising demand for large AI models,” especially through Azure and its Copilot AI tools.

The downgrade reflects valuation rather than fundamentals, with the firm emphasizing Microsoft’s resilience amid tariff concerns and its strong enterprise base.

Spotify was downgraded to Reduce from Neutral following share price gains. Although Spotify’s first-quarter revenue was in line with expectations, profits missed due to a €76 million charge in social taxes linked to share price appreciation.

“1Q25 revenue/PATMI were at 24%/10% of our FY25e forecasts,” Phillip Capital wrote.

User growth remained strong with 678 million monthly active users, a 10% annual increase, and premium subscribers up 12% to 268 million.

Despite maintaining its revenue forecast, Phillip Capital reduced its FY25 profit estimate by 4% and kept its $600 target price unchanged. “We do not see much upside due to full valuations,” analysts noted, even as they acknowledged Spotify’s leadership in audio streaming.