Microsoft stock declined 24% year-to-date through June 24, marking its worst first-half performance since 2000, as investor anxiety over the company’s massive artificial intelligence spending outweighs strong revenue growth and earnings beats.
The stock’s steeper decline in the first half of 2026 stands in stark contrast to the first half of 2000, when the dot-com bubble was still inflating before its March peak. This time, the pressure stems not from speculative excess but from investor skepticism about whether Microsoft’s heavy capital expenditure will generate adequate returns.
Microsoft’s capital spending jumped 66% year-over-year to $37.5 billion in the first half, bringing total first-half spending to $72.4 billion. The company has signaled that full-year 2026 capex will reach approximately $190 billion—23% higher than what Wall Street analysts had expected. According to Reuters, Microsoft faces pressure over AI spending and concentration risk tied to its partnership with OpenAI, as investors demand tangible proof that the infrastructure investments will justify their scale.
The broader tech sector has also felt the strain. Semiconductor stocks, including Intel, Micron, and Western Digital, have surged nearly four times in the first six months of 2026, creating a sharp divergence. Retail traders on Stocktwits shifted to bearish sentiment on Microsoft earlier this week, highlighting the disconnect between memory chip rallies and Big Tech losses, according to Gate.com reporting on June 25.
Despite the year-to-date decline, Wall Street remains largely bullish on the long term. Fifty-three of 56 analysts maintain a Buy or higher rating on Microsoft stock, with an average price target of $561.39—implying 53% upside from Monday’s close. The stock now trades at 20.2 times forward earnings, its lowest valuation multiple since late 2016, a level that preceded Microsoft’s strong gains from its early partnership with OpenAI and the integration of AI across its cloud and software businesses.
Sources
- Gate.com — Microsoft stock decline of 24% year-to-date through June 24, 2026; retail sentiment shift; analyst ratings and price targets
- CNBC — Q1 2026 stock decline of 23%, worst quarter since 2008 financial crisis
- Yahoo Finance — Microsoft’s capex spending 23% higher than analyst expectations; stock performance data
- Reuters — Investor concerns over AI spending and OpenAI concentration risk
- Fortune — Big Tech capex spending guidance and revisions for 2026
