Headquartered in Redmond, Washington, Microsoft Corporation (MSFT) is a global leader in software, cloud services, and AI services. Commanding a market capitalization of $2.9 trillion, the company offers a wide range of software and services, including Office, Exchange, SharePoint, Microsoft Teams, LinkedIn, azure, and Visual Studio.
With a market cap of more than $200 billion, MSFT falls under the category of “mega-cap stocks,” showcasing its well-established nature within the tech sector. The company’s leadership stems from its cloud dominance with Azure, a robust stream of recurring revenue from Office 365 and Windows, and its bold advancements in AI through Copilot and OpenAI integrations. Its leadership is further reinforced by strategic enterprise partnerships, cutting-edge cybersecurity solutions, and a growing presence in gaming with Xbox and Activision Blizzard.
Active Investor: FREE newsletter going behind the headlines on the hottest stocks to uncover new trade ideas
However, it’s not all sunshine and rainbow for Microsoft. The stock has fallen 16.2% since hitting a 52-week high of $468.35 on July 5. Shares of MSFT have declined 7.2% over the past three months, compared to the Technology Select Sector SPDR Fund’s (XLK) 3.9% decline over the same time period.
Moreover, in the longer term, MSFT shares have declined 5.2% over the past six months and 3.7% over the past 52 weeks. By contrast, XLK has gained marginally over the past six months and has surged 8.2% over the past 52 weeks.
Additionally, MSFT has been trading well below its 50-day and 200-day moving averages since January end, reinforcing the ongoing bearish price trend.
Microsoft’s underperformance over the past year stems from speculations over its heavy AI investments, including a $14 billion stake in OpenAI, which have yet to deliver expected returns. Additionally, the broader tech sector, including the “Magnificent Seven,” has faced a pullback due to concerns over high valuations and uncertain growth prospects.
On February 19, Microsoft announced Majorana 1, the world’s first quantum chip powered by a new Topological Core architecture. As a result of the groundbreaking innovation, the stock surged 1.3%.
Additionally, MSFT shares jumped 2.9% with its fiscal 2025 Q2 earnings released on January 29. The company reported a 12.3% year-over-year increase in its revenue, amounting to $69.6 billion. Moreover, the company posted an EPS of $3.23, also surpassing the Wall Street EPS estimates by 3.9%.
Meanwhile, in the competitive software infrastructure arena, Microsoft’s rival, Oracle Corporation (ORCL), is in the lead, with its shares gaining 19% over the past six months and rising 47.9% over the past 52 weeks.
However, Wall Street analysts remain highly bullish on MSFT’s prospects. The stock holds a consensus “Strong Buy” rating from the 42 analysts covering it. The mean target of $509.30 suggests a potential upside of 29.7% from the current market prices.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart