Tech giant Microsoft (MSFT) has seen its stock plunge in recent months, from an all-time high in October 2025 down around 36% today, reports note. There are signs that the first quarter of 2026 might be the worst Microsoft has seen since 2008, when the Great Recession hit. Some have drawn a connection between Microsoft’s spending on artificial intelligence (AI) development and this price drop, but is that warranted? Investors did not seem concerned, however, and sent shares surging up nearly 3% in Tuesday afternoon’s trading.
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Essentially, the report suggests, Microsoft’s plunging share price reflects two key points that are circulating around Microsoft, that Microsoft is having a hard time disputing. One point is that hyperscalers are ramping up capital expenditures, but growth rates are not surging to match. This is a fair enough point, though perhaps a bit premature. You can plant more seeds, but plants still take time to grow.
The second point, meanwhile, is that the growth of AI agents from smaller firms like Anthropic and OpenAI are working to push down prices on Microsoft’s own material, and with that, margins are also getting pushed down. Microsoft, the report noted, seems to be pushing consumers to lock into multiple Microsoft products. However, with a growing number of competitors in the field, this plan may not work so well.
June Showcase Firing Up
June has long been a big month for video games, thanks to the now-defunct E3 event. Game developers are keeping that tradition alive, though, and Microsoft has a June showcase planned heavily featuring Gears of War: E-Day. In fact, this game will be getting its own show, a Direct event, immediately following the Xbox Games Showcase on Sunday, June 7.
The show itself is expected to make quite a splash, as games ranging from Clockwork Revolution to Call of Duty to even, possibly, something of interest about State of Decay 3. With this being the 25th anniversary of Xbox, it is a safe bet that Microsoft will pull out all the stops to give us a big year before the next Xbox rolls out, possibly in 2027.
Is Microsoft a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 33 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 6.08% loss in its share price over the past year, the average MSFT price target of $586.30 per share implies 58.87% upside potential.
