‘It’s Performing Worse,’ Says Investor About Microsoft Stock

**Microsoft (NASDAQ:MSFT) **has had a bit of a hitch in its step of late. The company has seen its share price lose some 18% year-to-date.

Claim 50% Off TipRanks Premium

• Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions

• Stay ahead of the market with the latest news and analysis and maximize your portfolio’s potential

Of course, Microsoft is far from the only Magnificent 7 member to be trudging along for the first few months of 2026. The darkening AI sentiment has been dragging down plenty of software firms, and Microsoft is no exception.

Not even the strong revenues of the major tech companies have been enough to offset the worries revolving around AI and the growing capex spending. That was certainly the case for MSFT, as its $37.5 billion in capex last quarter seemed to overshadow revenues of $81.3 billion.

Though investor David Jagielski acknowledges that MSFT’s share price has been faring worse than some peers, he’s not too concerned about Microsoft’s long-term prospects.

“This is still a robust business with many different segments, including gaming, office software, devices, and others, that can help the company grow for years,” explains the investor.

Jagielski further details that Microsoft began 2026 trading at fairly elevated levels of 34x trailing earnings. He calls this a “high valuation,” unless robust AI-related growth comes to the fore.

So far, that hasn’t exactly been the case, argues the investor. While AI has given MSFT “a bit of a boost,” its 17% growth rate (15% in constant currency) isn’t exactly signaling skyrocketing growth.

“It’s solid, but not overly impressive or much higher than what it was before,” states the investor.

And yet, Jagielski notes that there are reasons to rally around this “blue chip stock.” He points out that Microsoft has many opportunities to use AI to “enhance” its existing slate of products and software services.

There’s another reason to be bullish about the company, namely its “incredibly deep pockets.” Microsoft’s operating income last quarter hit $38.3 billion, for example.

The investor therefore believes that MSFT’s dipping share price can serve as an opportunity for investors looking for a business that “remains in excellent financial shape.”

“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,” concludes Jagielski. (To watch David Jagielski’s track record, click here)

Wall Street, for the most part, isn’t presenting a competing argument. With 33 Buys and 3 Holds, MSFT enjoys a Strong Buy consensus rating. Its 12-month average price target of $594.02 contains an upside just shy of 50%. (See MSFT stock forecast)

Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Disclaimer & DisclosureReport an Issue