Microsoft closed out its worst quarter of stock performance since the 2008 financial crisis, capping a bruising stretch in which the microsoft stock price had slid more than 20 percent so far this year. The slump erased all of the gains the company had built roughly since the same time last year.
That decline came even as Microsoft reported revenues growing almost 17 percent in the first quarter compared with the same period a year earlier, underscoring how sharply the market has turned against the company’s AI spending story. Ben Reitzes of Melius Research wrote last week that Redmond is in a pickle, and the stock’s move has become part of a broader sell-off hitting software-as-a-service companies.
The pressure is tied to the scale of Microsoft’s bet on artificial intelligence. The company has poured massive sums into data centers and Azure cloud AI infrastructure, but it is struggling to scale its Copilot assistant efficiently without sending expenses higher. Harding Loevner analyst Kyle Levins said there is concern that the Microsoft 365 Copilot business has not lived up to expectations and could face new competitors.
Read Also: Msft Stock Slides as Copilot Struggles and AI Bets Face Pressure
Microsoft is also dealing with a second front inside its own product line. AI features added to Windows have drawn backlash from some users, who have mocked the software with the nickname Microslop. That reaction has complicated the company’s effort to present itself as the clear leader in everyday AI tools, even as it pushes ahead with a heavier push into its own models.
On Thursday, reported that Microsoft was pressing ahead with development of in-house AI models that could be ready by next year. Microsoft AI chief Mustafa Suleyman has said the company must deliver the absolute frontier and set 2027 as the target for reaching state-of-the-art performance. For investors, the message is plain: Microsoft is still spending heavily to stay ahead, but the market is no longer willing to reward the promise without faster proof that the products can grow as fast as the costs.
