Microsoft Faces a Two-Front Regulatory Squeeze Just as Melius Backs the Stock With a $665 Target

US Labor Dept suspends Microsoft from PERM green-card sponsorship; Italy, Norway and Denmark review Activision Blizzard as shares slip 1.5%.

A double dose of political pressure landed on Microsoft last Thursday, with Washington and Europe moving against the software giant on the same day. The US Department of Labor suspended the company from the Permanent Labor Certification program — the PERM channel through which employers sponsor foreign specialists for green cards — citing active federal investigations. Applications already in the pipeline are frozen, and no new ones will be accepted for now.

Almost simultaneously, Italy's competition authority AGCM, working alongside counterparts in Norway and Denmark, opened a European consumer-protection review of Microsoft's gaming subsidiary Activision Blizzard.

The market did not take the news quietly. Microsoft shares slipped 1.5% to EUR 466.15, leaving the stock roughly 2.5% below its 52-week high of EUR 478.10.

A Bullish Call Lands in a Hostile News Cycle

The regulatory noise collided with a markedly more optimistic signal from the analyst community. On Monday, Ben Reitzes of Melius Research upgraded Microsoft from Hold to Buy and lifted his price target sharply, from $465 to $665. The move underscores confidence in the software maker's earnings power — but it now has to compete for investors' attention with a mounting political headache.

Vice President JD Vance added fuel to the fire, accusing Microsoft of abusing the visa system and claiming the company offset layoffs last year with foreign workers. Microsoft pushed back firmly. It noted that roughly 80% of the approximately 6,000 H-1B petitions it filed in the last fiscal year were renewals or status changes for existing employees. Fresh hires, the company said, accounted for only about 1% of its US workforce and involved people already legally present in the country.

The Talent Pipeline Is the Real Battleground

At the heart of the debate is Microsoft's ability to keep recruiting global talent. PERM is the primary route to employment-based green cards in the United States, and a prolonged block would put the company at a disadvantage in the race for top international developers.

Crucially, the H-1B program itself has not been suspended. Microsoft can still employ its existing foreign staff and renew their work authorizations; the administrative freeze applies only to the transition toward permanent residency. The company also maintains major development hubs abroad, including sizable operations in Vancouver and Toronto, which could absorb international specialists if the US path stays closed. Should Microsoft demonstrate that the Labor Department's allegations do not hold up, petition reviews would likely resume before long.

The bear case looks different. A suspension stretching over many months risks a quiet drain of talent whose green-card processes are now frozen indefinitely. Proposed special fees on guest-worker visas could make future hiring meaningfully more expensive, and shifting research and development abroad on a large scale would bring friction and higher costs. On the European side, Italy's watchdog is examining monetization mechanics and virtual currencies in titles such as Diablo Immortal and Call of Duty Mobile. Under EU law, consumer-protection violations can trigger fines of up to 4% of annual revenue in the affected countries — a drawn-out fight over digital content monetization would put another business segment under margin pressure.

Product Momentum as a Counterweight

Against this regulatory backdrop, Microsoft is pressing ahead on the product front. Pre-orders have opened for the Surface Laptop Ultra and the Surface RTX Spark Dev Box. Microsoft Execution Containers are now broadly available on Windows, and hybrid intelligence plans aim to deepen the interplay between local and cloud-based computing.

If that pipeline converts quickly into demand, market confidence should firm up. A smooth launch for the new devices and broad adoption of the developer tools could be enough to extend the uptrend and push the valuation to fresh highs.

What Investors Should Watch

The near-term roadmap is fairly clear. As long as the stock holds above EUR 460, the broader upward trend remains intact; a sustained break below that level would suggest the market is pricing in a longer stretch of regulatory uncertainty. The next real catalyst will be how the Labor Department responds to Microsoft's statements — whether it opens formal proceedings or reaches an agreement on documentation requirements. Investors should also watch whether Microsoft takes legal action against the suspension, or whether the restrictions spread to other technology companies.

Hard numbers on the actual business will arrive soon enough. Microsoft has said it will report results for the first quarter of fiscal 2027 on October 28, 2026, after the US market close. That release will be the next tangible test of whether the analysts' optimism — including that $665 target — is justified.