Microsoft Battles AI PC Reality as Wall Street Stays Bullish

Microsoft ( (MSFT) ) has been popular among investors this week. Here is a recap of the key news on this stock.

Microsoft is facing mixed signals from the market as its big AI push encounters resistance on the consumer side, even as Wall Street remains firmly optimistic on the stock. PC partner Dell warned at CES 2026 that the much-hyped “AI PC” upgrade cycle has so far fallen short of expectations, with consumers often confused rather than motivated by AI branding and many mainstream AI tasks still easily handled on older Windows 10 machines. The lukewarm demand has unnerved investors, contributing to modest share-price slippage in recent sessions and raising questions over how quickly Microsoft can turn its AI investment in Windows and PCs into broad-based hardware-driven growth.

At the same time, Microsoft is doubling down on strategic initiatives that could support longer-term value creation. The company is preparing “major updates” to the Windows 11 full-screen experience, a move widely seen as part of a broader plan to make PCs behave more like consoles and tighten the link between Windows and Xbox gaming. New Xbox hardware, particularly WiFi-enabled controllers aimed at reducing latency and boosting cloud gaming performance, underscores that push. Microsoft has also aggressively denied rumors of large-scale layoffs tied to AI spending, calling reports of 11,000–22,000 potential job cuts “100 percent made up,” in an effort to reassure markets about operational stability. Despite the recent volatility, analysts remain strongly bullish: MSFT carries a Strong Buy consensus, and the average price target of around $631 suggests more than 30% upside from current levels, signaling that Wall Street still sees Microsoft as a core long-term AI and gaming beneficiary even as near-term AI PC trends disappoint.