Microsoft shares have been weak since the beginning of the year: Why the tech giant is underperforming

• Azure growth weakens, margins come under pressure
• High AI investments are a burden
• Analysts see long-term potential

Microsoft shares are starting 2026 below the expectations of the tech industry. Since the start of the year there has now been a sharp decline of 17.3 percent. Compared to the other “Magnificent Seven”, the group is lagging behind. On Tuesday, the stock on the NASDAQ temporarily lost 0.27 percent to $398.86.

Azure growth weaker than expected

According to the company, returns are currently suffering from a slowdown in Azure growth and high investments in artificial intelligence. For a long time, Azure was Microsoft’s growth engine. However, analysts are reporting a noticeable slowdown in the cloud segment. As ad-hoc-news writes, competition from Amazon’s AWS and Google Cloud is intensifying, while enterprise customers are increasingly demanding cost-effective solutions. This leads to pressure on margins in the short term, but in the long term Microsoft remains a strong player thanks to high scalability and customer loyalty, it is said.

AI investments: opportunities versus margin pressure

Microsoft is relying heavily on AI, especially through partnerships with OpenAI and its own solutions such as Copilot, which integrates into Office and Teams. However, these investments incur significant costs in data centers and GPU procurement, which weighs on profit margins. According to ad-hoc-news, analysts see this as the core of the current underperformance. The Monetization of AI is crucial: early adoptions are high, but the full return on the investments is likely to take time.

Analysts remain optimistic

However, analysts are undeterred by the current setbacks. According to TipRanks, 33 out of 36 analysts recommend buying Microsoft shares, while three experts recommend holding. There are currently no sales recommendations. The average price target is $594.02, approximately 48.52 percent above the recent closing price of $399.95.

Does patience pay off with Microsoft shares?

Despite short-term pressures from cloud slowdowns and high AI spending, Microsoft remains a blue chip with strong enterprise dominance. According to experts, strategic partnerships, new products and the combination of cloud, AI and legacy software offer long-term growth opportunities. However, it remains to be seen whether investors will actually be able to benefit from Microsoft shares in the future.

Bettina Schneider, editorial team at finanzen.net

This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.

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