After Microsoft’s Q1 Slide, Are the Bulls Still On Board?

Microsoft (NASDAQ: MSFT) was past seen trading adjacent $373, portion the mean expert terms people sits astatine $587.31. That spread exceeds 57%, a dislocation that demands explanation. The banal has shed 22.8% year-to-date, falling from $484.35 astatine the commencement of the year. When a institution of this standard trades this acold beneath wherever 57 analysts deliberation it belongs, the question is whether the marketplace oregon Wall Street is right.

Microsoft operates crossed unreality infrastructure, endeavor software, gaming, and artificial quality (AI) services. Its Azure level is 1 of the astir strategically important assets successful planetary technology, and its OpenAI concern has made it the default infrastructure furniture for the AI buildout. The selloff is the story.

The diminution is rooted successful superior strength alternatively than net failure. Microsoft has beaten EPS estimates successful each of the past 4 quarters, with surprises ranging from +7.25% to +12.8%. Revenue grew 16.7% year-over-year successful the astir caller 4th to $81.27 billion. Azure grew 39% year-over-year. None of those numbers explicate the pullback.

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Capex jumped 89% year-over-year to $29.88 cardinal successful Q2 FY2026 alone, astir doubling from the anterior quarter. Full-year FY2025 capex reached $64.55 billion, up 45.13%. Free currency travel for FY2025 fell 3.32% to $71.61 billion. A reported hiring frost successful unreality and income groups and broader big-tech assemblage rotation circular retired the narrative, adjacent without an net miss.