Microsoft Stock Down 18% in 2026 Amid AI Spending Concerns

Investors have been bearish on AI stocks, but Microsoft's business remains strong despite the stock sell-off.

Published on Mar. 2, 2026

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Microsoft's stock has fallen 18% so far in 2026, underperforming the broader tech sector. Concerns over the company's high valuation and spending on AI have contributed to the sell-off, but Microsoft's diverse business segments and strong financials suggest the stock may be a buying opportunity despite the recent decline.

Why it matters

Microsoft is a bellwether tech stock, and its performance is closely watched by investors. The company's struggles this year highlight broader market skepticism around AI investments, but Microsoft's long-term growth potential remains intact.

The details

Microsoft's stock has fallen 18% since the start of 2026, compared to a 7% decline in the Roundhill Magnificent Seven ETF that tracks other major tech giants. Factors behind the sell-off include the stock's high valuation heading into the year and concerns that the company's Copilot AI chatbot has not impressed relative to competitors. However, Microsoft's business remains robust, with solid growth across gaming, office software, devices, and other segments. The company has also amassed over $119 billion in profit over the past 12 months, giving it ample resources to invest in AI and other growth initiatives.

  • Microsoft's stock was trading at around 34 times its trailing earnings at the start of 2026, before falling to around 25 times earnings.
  • The company reported 17% revenue growth in the December 2025 quarter, which fell to 15% when excluding foreign exchange impacts.

The players

Microsoft

A global technology company that develops, manufactures, licenses, supports, and sells computer software, consumer electronics, personal computers, and related services.

Roundhill Magnificent Seven ETF

An exchange-traded fund that tracks the performance of seven major technology companies, including Microsoft.

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What they’re saying

“Microsoft's stock was overvalued heading into the year, but now, with a more reasonable valuation, it may be a great time to buy it. This is a solid blue chip stock that you can build your portfolio around.”

— David Jagielski, CPA (The Motley Fool)

The takeaway

While Microsoft's stock has struggled amid broader market skepticism around AI investments, the company's diverse business segments and strong financial position suggest the sell-off may be an opportunity for long-term investors to buy a high-quality tech stock at a more reasonable valuation.