New York, June 12, 2026, 14:05 ET
- Microsoft shares were last at $386.92 Friday afternoon, off 0.9% from Thursday’s close of $390.34.
- Investors are rethinking artificial-intelligence capex after Oracle’s new AI infrastructure spending hit the sector. Capex means longer-term spending on things like data centers and chips.
- Microsoft’s next earnings report is expected to be the key event for the stock. Wall Street Horizon puts an unconfirmed date on July 29 after the close, but Microsoft hasn’t given an official date yet.
Microsoft shares struggled again Friday. The stock traded near $386.92, hitting an intraday low of $382.32, and put the company’s market value at about $2.88 trillion. Microsoft’s P/E ratio sat around 23, meaning the stock is priced for a lot of future growth. Any stumble in AI-related cloud revenue could weigh heavily.
Microsoft’s decline stands out because it’s losing ground even as the rest of the market climbs. Shares closed down 1.77% at $390.34 on Thursday, while the S&P 500 gained 1.8% and the Nasdaq composite added 2.5%. Barron’s said Friday the stock has dropped for six sessions in a row, with worries over AI spending hitting big tech.
Oracle’s late Wednesday update kicked things off. Reuters said Oracle plans to raise nearly $40 billion through debt and equity in fiscal 2027, while capital spending could reach $95 billion, counting amounts it expects customers to repay. “The demand is real with cloud infrastructure revenue and backlog growing fast. But the funding question is getting harder,” eMarketer analyst Jacob Bourne told Reuters. That issue is now hitting Microsoft, too, since investors are looking at the same problem: when does AI infrastructure spending turn into profitable revenue? Reuters
Microsoft’s argument for the spending looks solid. The company reported revenue of $82.9 billion, up 18%, operating income at $38.4 billion, up 20%, and diluted EPS of $4.27, up 23%. Microsoft Cloud revenue was up 29% to $54.5 billion. Azure and other cloud services jumped 40%. CEO Satya Nadella said, “Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.” Microsoft
Microsoft’s CFO Amy Hood gave a bearish view, telling investors the company’s growth is getting more capital intensive. She said Microsoft plans over $40 billion in capex for the fiscal fourth quarter and about $190 billion for calendar 2026. That 2026 capex includes $25 billion tied to higher component prices. Hood also said the company will likely be capacity-constrained into 2026. For Microsoft Cloud, she said gross margin should land near 64%, down from last year, hit by AI spending and more GitHub Copilot use.
Investors are looking at three main items in Microsoft’s fiscal Q4 report: Azure’s constant-currency growth, which is expected to come in at 39% or 40%, numbers around Copilot paid-seat counts and average revenue per user, and remaining performance obligations, or RPO. Microsoft said commercial RPO hit $627 billion in Q3, which bulls see as a signal for future revenue. But if capex growth looks like it’s outpacing what investors think revenue can keep up with, the stock could stay under pressure.
There’s also a lingering overhang for Microsoft’s consumer business. Reuters, citing Bloomberg News, said on Wednesday that Microsoft’s Xbox unit is set to make major layoffs and cut budgets next month. Microsoft did not comment when Reuters asked about the plans. The story didn’t spell out the exact size of the cuts. It follows after Microsoft’s More Personal Computing segment fell 1% in Q3 and Xbox content and services revenue dropped 5%.
Microsoft stock isn’t trading at a discount right now and the near-term risk is high. Bulls highlight Azure’s 40% growth, a big cloud backlog, and momentum from AI revenue. The MarketBeat consensus is “Moderate Buy” based on 41 buys, six holds, and an average 12-month price target at $561.20. Bears point to a 23x earnings multiple that could look expensive if rising AI capex keeps hitting margins and free cash flow. For now, MSFT may appeal most to investors willing to wait for Microsoft’s AI spending to turn into stronger Azure and Copilot sales. MarketBeat
