Microsoft Stock Holds Promise Despite 28.6% Drop in 6 Months

Azure growth, surging AI bookings, and solid earnings keep the long-term investment case intact.

Apr. 2, 2026 at 5:20pm

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Microsoft's (MSFT) stock has declined 28.6% in the past six months, underperforming the broader tech sector. However, the company's fundamentals remain strong, with impressive growth in its Azure cloud platform, surging AI bookings, and solid earnings performance. While the stock's valuation may be elevated, the long-term investment thesis for Microsoft remains compelling for both existing and prospective investors.

Why it matters

Microsoft's performance is closely watched as it is a bellwether for the technology sector. The company's ability to navigate macroeconomic headwinds, maintain cloud growth, and capitalize on the AI opportunity will be crucial in determining the stock's trajectory and its impact on the broader market.

The details

Despite the recent stock decline, Microsoft's Intelligent Cloud segment generated $32.9 billion in revenues in the second quarter of fiscal 2026, representing a 29% year-over-year increase. Azure and other cloud services revenues advanced 39% during the quarter, driven by strong enterprise adoption. Management expects Azure revenue growth of 37-38% in constant currency for the third quarter. Microsoft's AI investments are also gaining traction, with Copilot bookings surging 230% in the second quarter and the commercial remaining performance obligation reaching $625 billion, up 110% year over year. The company's earnings strength, with revenues, operating income, and EPS beating expectations, and its shareholder returns through dividends and share repurchases, provide a cushion for investors.

  • In the past six months, Microsoft's stock has declined 28.6%.
  • In the second quarter of fiscal 2026, Microsoft's Intelligent Cloud segment generated $32.9 billion in revenues, a 29% year-over-year increase.
  • In the second quarter of fiscal 2026, Azure and other cloud services revenues advanced 39%.
  • For the third quarter of fiscal 2026, Microsoft guided for Azure revenue growth of 37-38% in constant currency.
  • In March 2026, Microsoft reorganized its Copilot leadership structure and expanded Microsoft 365 Copilot with new features.

The players

Microsoft

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

Amazon Web Services (AWS)

The cloud computing division of Amazon, the world's largest provider of cloud infrastructure services.

Google Cloud

The cloud computing division of Alphabet, offering a range of cloud-based products and services.

Oracle Cloud Infrastructure

The cloud computing division of Oracle, providing database and enterprise workload services.

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What’s next

Investors will be closely watching Microsoft's ability to maintain Azure's growth rate and expand cloud margins as the company continues to invest heavily in AI infrastructure to fend off competition from Amazon, Google, and Oracle.

The takeaway

Despite the recent stock decline, Microsoft's strong cloud growth, expanding AI product suite, and consistent earnings performance make it a compelling long-term investment. While the stock's valuation may be elevated, the company's fundamentals remain intact, providing a cushion for existing shareholders and potential entry points for prospective investors.