Overview
- Microsoft shares have fallen roughly 23% this year and about 30% from their peak, making it the weakest of the mega-cap tech names during the AI pullback.
- Goldman Sachs says the slump has gone too far, keeping a Buy on Microsoft with a $600 target, and its strategists call tech valuations a value opportunity as growth expectations remain intact.
- Investors are fixated on huge AI data-center bills and near-term margins after Microsoft’s capex run rate pointed to roughly $140–$150 billion for 2026, with Alphabet guiding $175–$185 billion and Meta $115–$135 billion.
- Goldman’s Gabriela Borges cites two pressure points for the stock: rising capex without matching Azure estimate hikes and fears that rival AI tools like Anthropic’s Claude could erode Microsoft 365’s edge.
- Despite the sell-off, Microsoft’s latest results showed strength, with $81.3 billion in revenue, Azure up 39%, Microsoft Cloud topping $50 billion, and 15 million paid Copilot seats that signal early but growing monetization, while a potential legal fight over OpenAI’s use of AWS adds fresh risk as Microsoft and OpenAI affirm Azure’s API exclusivity.