Why Microsoft (MSFT) Stock Is Declining Today

Microsoft’s Recent Performance: An Overview

Microsoft (NASDAQ:MSFT) saw its stock price drop by 11.8% during the afternoon trading session following the release of its fourth-quarter results. While the company reported stronger-than-expected revenue in its Business Services and Intelligent Cloud divisions, its Personal Computing segment fell short of expectations. Even after excluding the influence of OpenAI, earnings per share surpassed analyst forecasts.

Despite these positives, some investors questioned whether the growth in Intelligent Cloud and Azure was robust enough, especially given the anticipation surrounding Microsoft’s AI-driven offerings.

Looking forward, Microsoft’s leadership remains optimistic about ongoing demand for products like Microsoft 365 Copilot, GitHub Copilot, and other AI-powered business solutions. However, they also noted that factors such as capital allocation and supply limitations could influence the speed of future growth. Overall, while the results showed areas of strength, market expectations were even higher.

Market Reaction and Investor Sentiment

Stock market reactions can sometimes be exaggerated, and significant declines may create attractive entry points for long-term investors. Is this a good moment to consider buying Microsoft shares?

How the Market Interprets the News

Microsoft’s stock is typically stable, with only three instances in the past year where the price moved more than 5%. Such a sharp decline is unusual for the company and highlights the significant impact of the latest earnings report on investor perceptions.

Just six days earlier, Microsoft’s stock rose 4% after a UBS analyst reaffirmed a Buy rating and set a $600 price target. The analyst pointed to the continued expansion of major Fairwater AI data centers in Atlanta (operational since October) and Wisconsin (expected to launch in the first quarter of 2026) as important short-term drivers for Azure’s growth.

Adding to the positive outlook, Microsoft announced a multi-year collaboration with the Mercedes-AMG PETRONAS F1 Team, integrating its cloud and enterprise AI technologies into the team’s operations. This partnership aims to leverage Microsoft Azure and AI for everything from factory processes to on-track performance analysis and race strategy. The announcement came at a time when investors were eager for evidence that Microsoft’s investments in AI and cloud infrastructure were delivering real-world results, and this high-profile partnership served as a strong example.

Stock Performance and Industry Trends

Since the start of the year, Microsoft’s shares have declined by 10.1%. Currently trading at $425.04, the stock is 21.6% below its 52-week high of $542.07 reached in October 2025. For perspective, an investor who put $1,000 into Microsoft five years ago would now have an investment valued at $1,832.

While Wall Street’s attention is focused on Nvidia’s record highs, another lesser-known semiconductor company is quietly leading in a crucial AI component that industry giants depend on.