Microsoft's (MSFT 3.66%) stock is down more than 20% in 2026.
*Stock prices used were the afternoon prices of June 22, 2026. The video was published on June 24, 2026.
Parkev Tatevosian, CFA has positions in Microsoft. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
Why: Rosen Law Firm, a global investor rights law firm, reminds purchasers of common stock of Microsoft Corporation (NASDAQ: MSFT) between May 1, 2025 and January 28, 2026, inclusive (the "Class Period"), of the important August 11, 2026 lead plaintiff deadline.
So What: If you purchased Microsoft common stock during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.
What to do next: To join the Microsoft class action, go to https://rosenlegal.com/cases/microsoft-corporation/join or call Phillip Kim, Esq. toll-free at 866-767-3653 or email [email protected] for information on the class action. A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than August 11, 2026. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.
Why Rosen Law: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources, or any meaningful peer recognition. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm has achieved the largest ever securities class action settlement against a Chinese Company. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered billions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs' Bar. Many of the firm's attorneys have been recognized by Lawdragon and Super Lawyers.
Details of the case: According to the lawsuit, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) Microsoft's Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; (2) Microsoft's flagship proprietary AI model ranked well below competitors on a number of benchmark tests; (3) Microsoft needed to increase by billions of dollars its capital expenditures and divert graphics processing unit ("GPU") and central processing unit ("CPU") capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related research and development ("R&D"); and (4) as a result, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and Microsoft's Copilot offerings had lost market share to rival products, a trend that was increasing. When the true details entered the market, the lawsuit claims that investors suffered damages.
To join the Microsoft class action, go to https://rosenlegal.com/cases/microsoft-corporation/join or call Phillip Kim, Esq. toll-free at 866-767-3653 or email [email protected] for information on the class action.
No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. An investor's ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.
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Contact Information:
Laurence Rosen, Esq.
Phillip Kim, Esq.
The Rosen Law Firm, P.A.
275 Madison Avenue, 40th Floor
New York, NY 10016
Tel: (212) 686-1060
Toll Free: (866) 767-3653
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Microsoft Corporation's data center capacity expansion to 10GW by FY26 is projected to accelerate Cloud revenue growth by 12.4% to 21.3%, aided by the Anthropic Azure AI Foundry deal. Average revenue per user for Office 365 can surprise to the upside as Copilot adoption drives a transition toward consumption-based and usage-based compute pricing models. Aggressive capital expenditure projected to reach $190B by the end of CY26 carries an estimated negative ROI of -9.3%, signaling that Microsoft is overpaying for revenue growth.
, /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against Microsoft Corporation ("Microsoft" or the "Company") (NASDAQ: MSFT). Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
The class action concerns whether Microsoft and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.
You have until August 11, 2026, to ask the Court to appoint you as Lead Plaintiff for the class if you purchased or otherwise acquired Microsoft securities during the Class Period. A copy of the Complaint can be obtained at www.pomerantzlaw.com.
[Click here for information about joining the class action]
On January 28, 2026, Microsoft announced disappointing results for its fiscal second quarter ended December 31, 2025. First, during the quarter Microsoft's Azure growth had slowed suddenly and fallen below analyst expectations. During the related earnings call, CFO Amy E. Hood revealed that the slower Azure growth was primarily due to computational capacity constraints, as Microsoft had diverted CPU and GPU capacity to Copilot applications and AI-related R&D. Second, Microsoft revealed that its capital expenditures had increased to $37.5 billion during the quarter, causing Microsoft's capital expenditures for the first six months of its fiscal 2026 to increase to $72.4 billion compared to $88.2 billion for all of Microsoft's fiscal 2025. Third, Microsoft revealed, for the first time, that the number of paid Microsoft 365 Copilot seats totaled only 15 million to date, materially below analyst estimates and a fraction of the more than 450 million commercial Microsoft 365 users.
On this news, the price of Microsoft stock fell nearly 10%.
Then, on February 3, 2026, The Wall Street Journal revealed, in an article titled "Microsoft's Pivotal AI Product Is Running Into Big Problems," that severe challenges and functionality issues had plagued Microsoft's Copilot offerings, leading to Copilot losing market share during the Class Period to competing products such as Google's Gemini. The price of Microsoft stock continued to fall in the days after Microsoft's second quarter 2026 earnings announcement as the market continued to digest the adverse news and sources such as The Wall Street Journal revealed new adverse information.
Thereafter, on March 17, 2026, The Wall Street Journal revealed in an article titled "Microsoft Seeks More Coherence in AI Efforts With Copilot Reorganization" that Microsoft was reorganizing its Copilot product teams to unify commercial and consumer versions partly in response to the challenges revealed by The Wall Street Journal's prior reporting on Copilot's problem-plagued development and disappointing customer adoption.
On this news, the price of Microsoft stock continued to fall.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.
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Microsoft’s Xbox is raising prices of its gaming consoles by up to $150 worldwide, citing a deepening global components crisis that has sent storage and memory costs soaring across the consumer electronics industry.
Groups representing automakers, retailers, electronics firms and others had warned earlier this month that the increasing demand for memory chips could lead to dramatic price hikes in U.S. consumer goods and disrupt supply chains.
Effective Aug. 1, the price of Xbox consoles will increase by $100 for 512 GB models and $150 for 1 TB models. Microsoft will also discontinue its 2 TB model.
Microsoft Xbox said prices for its gaming consoles will rise as much as $150 this summer. CFOTO/Future Publishing via Getty Images “Unfortunately, console storage and memory prices have increased by more than 2.5 times and we expect another doubling by the fall of 2027,” Xbox said, adding that the hardware supply chain crisis has hit the gaming sector particularly hard.
Xbox raised the prices of its consoles twice last year as it grappled with tariff-induced cost pressures, strong competition and uncertain spending.
Rival Sony raised the prices of its PlayStation 5 consoles in April, following a price increase last August last year.
Microsoft Xbox raised prices on its gaming consoles twice last year. Bloomberg via Getty Images Apple, the world’s most valuable consumer electronics company, raised iPad and MacBook prices on Thursday, saying it could no longer shield customers from soaring memory and storage chip costs driven by the AI industry’s datacenter buildout.
Xbox is planning major layoffs next month and significant cuts to marketing and other budgets, Bloomberg News reported earlier this month.
Key Takeaways Microsoft's Majorana research faces scrutiny, fueling debate over quantum validation and potential.D-Wave Quantum reported Q1 2026 bookings of $33.4M, driven by enterprise demand and system sales.D-Wave Quantum's 2026 loss estimate improved to 25 cents per share, with six positive estimate revisions. A recent scientific dispute surrounding Microsoft's (MSFT - Free Report) quantum-computing program has become one of the most-watched developments in the quantum sector this week. Yesterday, researchers published a critique in Nature questioning whether Microsoft's experimental results provide sufficient evidence for the Majorana particles that support its topological-qubit architecture (ref: BBC). Microsoft has disputed the criticism and maintains confidence in its research roadmap.
This has led to a serious investment debate within the industry — should investors focus on scientific validation or long-term platform potential? Let’s delve deeper.
Why Microsoft's Quantum Strategy Is Under ScrutinyMicrosoft is pursuing a topological-qubit architecture, a markedly different approach from the superconducting and trapped-ion technologies that currently dominate much of the quantum-computing industry, including those used by IonQ (IONQ - Free Report) , Rigetti Computing (RGTI - Free Report) and several large technology companies such as IBM (IBM - Free Report) and Google.
Rather than pursuing incremental improvements in existing quantum systems, Microsoft is attempting to develop topological qubits that could theoretically deliver lower error rates and greater scalability. However, this approach also comes with significantly higher scientific and technical risks.
The controversy started only months after Microsoft introduced its Majorana 1 chip and weeks after unveiling Majorana 2, which the company said delivered reliability improvements and reinforced its long-term quantum roadmap. However, a peer-reviewed critique published on June 24 argued that Microsoft's data does not conclusively demonstrate the Majorana signatures required to validate its approach. Microsoft has defended its findings and maintains that its development plans remain unchanged.
For investors, the dispute is primarily about scientific validation rather than commercial execution. Microsoft's quantum initiative remains a relatively small part of its overall business, limiting any near-term financial impact. However, the episode highlights a broader lesson for the quantum-computing sector. Investors are increasingly rewarding companies that can demonstrate measurable technical progress and commercial traction, rather than relying solely on breakthrough claims.
Why D-Wave Stands Out Amid the UncertaintyFor investors, the critical question is whether the episode changes how they evaluate quantum-computing companies more broadly.
In that regard, investors should now focus on measurable commercial traction and independently verifiable technical milestones. Among publicly traded quantum names, D-Wave Quantum (QBTS - Free Report) stands out because its investment cases are currently being driven more by execution than by unresolved scientific claims.
D-Wave reported first-quarter 2026 bookings of $33.4 million, a nearly twentyfold increase from the prior-year period, supported by enterprise demand and system sales. The company has also expanded beyond its traditional annealing platform through the acquisition of Quantum Circuits and the launch of a gate-model roadmap, providing investors with multiple paths to commercialization.
Image Source: Zacks Investment Research
The improving commercial outlook is also beginning to show up in analyst expectations. According to Zacks Consensus Estimate, D-Wave's projected 2026 loss has narrowed over the past 90 days, with the consensus estimate improving from a loss of 31 cents per share to a loss of 25 cents.
Notably, six analysts have raised their full-year 2026 estimates over the past 60 days, reflecting growing confidence in the company's commercialization strategy and accelerating customer adoption.
While D-Wave currently remains unprofitable, the direction of estimate revisions suggests that Wall Street is becoming increasingly optimistic about the company's path toward improved operating performance.
Bottom LineMicrosoft's latest controversy shows an important reality for quantum-computing investors. Scientific breakthroughs can generate excitement, but long-term shareholder value will ultimately depend on commercial execution and independently validated technical progress. As the industry moves closer to fault-tolerant quantum computing, investors are likely to reward companies that can demonstrate customer adoption, revenue growth and measurable technological advancement, while placing less emphasis on breakthrough claims that remain subject to scientific debate.
Against this backdrop, D-Wave Quantum appears relatively well-positioned, supported by its recent development and improving earnings expectations in recent months. As the stock currently carries a Zacks Rank #3 (Hold), existing investors may consider maintaining their positions as the company advances its commercialization strategy. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
HomeIndustriesSoftwareTech StocksTech StocksThose who owned Microsoft’s stock for the free-cash-flow profile now ‘are being asked to underwrite a capital-intensity cycle,’ says one analystJune 25, 2026, 4:51 p.m. ET
Microsoft’s stock is having its worst month since 2000, and it’s tracking toward one of its worst annual performances on record, exemplifying a broader rotation out of the “Magnificent Seven.”
Shares of Microsoft MSFT closed down 3.5% on Thursday, and the stock ranks 485th out of 503 in the S&P 500 SPX in terms of performance on a month-to-date basis, according to Dow Jones Market Data. It’s down 21.6% over the course of the month so far, in what could be its worst-ever June performance.
Microsoft MSFT shares inched lower and printed a fresh 52-week low this morning after a senior Stifel analyst, Brad Reback, lowered his price target on the tech behemoth to $400.
As sentiment shifts from blind AI enthusiasm to cold financial scrutiny, MSFT’s relative strength index (RSI) has crashed into the late 20s, indicating “oversold” conditions that often trigger a near-term reversal.
Still, Reback recommends some caution in playing Microsoft stock that’s already down more than 25% year-to-date.
In his research note, Reback argued the current consensus estimates for Microsoft are “somewhat” ignoring the potential for severe margin compression ahead.
“Severe costs associated with running and scaling Azure’s rapid growth will create unprecedented friction,” he told clients.
According to the Stifel analyst, MSFT’s gross margins (2027) could shrink by 450 basis points on a year-over-year basis to about 63%, significantly below Street’s optimistic consensus of 66.5%.
This dramatic contraction is almost entirely structural – driven by explosive capex and subsequent heavy depreciation costs of building, cooling, and maintaining specialized AI data centers.
Note that MSFT shares are currently trading decisively below their major moving averages (MAs), reinforcing that bears remain firmly in control.
Stifel trimmed its price objective on Microsoft shares also because it believes the consensus EPS estimates for FY27 are inflated by a full dollar.
Wall Street currently expects the titan’s full-year per-share earnings to come in at $19.45, a number analyst Brad Reback sees as highly unrealistic given its surging finance lease obligations and upper single-digit operating expense growth.
This structural expenditure leaves very little room for traditional enterprise cost-cutting measures to balance the scales.
Plus, he also highlighted a continuous decline in organic free cash flow as a major corporate red flag.
If FCF fails to rebound in FY27, Microsoft’s historical flexibility to “aggressively” fund growing shareholder dividends and execute massive share buyback plans will face restrictive boundaries – the analyst added.
All in all, Stifel’s research report perfectly encapsulates a broader, sector-wide realignment hitting the entire technology architecture space.
The market is aggressively transitionary; investors are no longer content with magnificent top-line annualized AI run rates (such as Microsoft's recent $37 billion metric) if it requires tracking toward an astronomical $190 billion in annual capital spending to secure it.
As capex intensity across the enterprise software sector balloons, Wall Street is enforcing a stricter valuation discipline, punishing firms whose near-term cash return profiles are being swallowed by multi-year infrastructure cycles.
For MSFT stock, breaking out of this bearish cycle will require proving to a newly skeptical market that its heavily funded Copilot and Azure AI products can efficiently convert into highly profitable, high-margin software recurring revenue rather than remaining capital-guzzling utilities.
Hours after Apple announced price increases for MacBooks and iPads, Microsoft said consumers can also expect to pay more for Xbox game consoles, reflecting rising component costs.
Starting Aug. 1, Xbox Series S consoles containing 512GB of storage will go up by $100 to about $500, Microsoft said Thursday, while models with 1TB will increase by $150 more. The entry-level Xbox Series X will now start at about $750.
"Last October, we increased XBOX console price by $20-$70 in the U.S.," the company said in a blog post. "We hoped another price increase would not be necessary, and we have spent the last several months working with suppliers on options."
Microsoft said "console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027."
Memory manufacturers such as Micron and SK Hynix have a limited capacity, and they are prioritizing high-bandwidth memory for artificial intelligence infrastructure, such as Nvidia's graphics processing units. Manufacturers are raising prices to reflect higher demand, resulting in wider profit margins.
That puts a strain on consumers looking to buy devices such as smartphones, tablets and computers. Apple's announcement on Thursday came after CEO Tim Cook told The Wall Street Journal that price increases had become inevitable.
"The entire consumer electronics industry is struggling with the current components crisis, but the effects are particularly hard on consoles," the Xbox unit said in the post. "Unlike phones, computers, speakers, and other consumer devices, consoles are typically not sold at a profit, but instead for less than they cost to make."
Microsoft said the 2 TB Xbox Series X, introduced in 2024, will no longer be available.
Microsoft shares sank almost 4% on Thursday. Apple's stock dropped 5%.
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Microsoft announced price hikes for its Xbox Series X on Thursday, effective August 1. Phil Barker/Future Publishing via Getty Images Shoppers got a double whammy of bad news on Thursday as Microsoft announced yet another round of Xbox price hikes hours after Apple boosted prices.
Taken together, the price increases — which both companies say are due to spiking memory and storage costs — are set to make holiday shopping significantly more expensive. For gamers, it makes gaming increasingly feel like a luxury hobby.
Microsoft's popular Xbox game consoles are set to increase by $100-$150 on August 1. The 512 GB models will go up by $100, and the 1 TB versions will increase by $150. The Xbox with the highest available storage configuration of 2 TB will be discontinued entirely.
"Last October, we increased XBOX console price by $20-$70 in the U.S. We hoped another price increase would not be necessary, and we have spent the last several months working with suppliers on options," Microsoft said in a blog post. "Unfortunately, console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027."
The new price hikes will apply worldwide.
This is the third time Microsoft has raised prices on its latest Xbox generation, following increases in May and October 2025. The Xbox Series X is now $250 to $300 more expensive than it was when it launched in 2020.
The memory shortage has impacted a broad range of consumer electronics companies, many of which have raised prices in the last 8 months.
Microsoft's chief rivals in the gaming wars, PlayStation and Nintendo, have both previously announced price increases for the PS5 and Nintendo Switch 2, respectively.
Computers, which also rely on memory and storage chips, have also become more costly to produce, and Apple followed many of its peers in boosting MacBook and iMac prices, along with the iPad, Apple TV, HomePod, and Vision Pro, on Thursday — by as much as $300.
"The entire consumer electronics industry is struggling with the current components crisis, but the effects are particularly hard on consoles," Microsoft said. "Unlike phones, computers, speakers, and other consumer devices, consoles are typically not sold at a profit, but instead for less than they cost to make."
In its blog post announcing the coming price hikes, Microsoft shared details on programs it said "make XBOX consoles more accessible," such as buy-now-pay-later and interest-free financing services, along with efforts to make previously used game consoles available via retailers to purchase.
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Steven Tweedie is a Deputy Executive Editor at Business Insider. He launched the Business News desk in early 2020 and helped grow it into the Trending and Tech News desk, a fast-paced reporting powerhouse that tackles the biggest business and tech stories of the day in an approachable way. He now oversees the Business News desk, Corporate team, and Weekend desk. He works out of the New York newsroom and helps train fellows and new hires at all experience levels in addition to his daily editing duties.He began his career covering app startups and gadgets on the Technology desk at BI. His past reporting and scoops have been cited or syndicated by publications including the WSJ, Associated Press, CNN, Bloomberg, The Guardian, and Forbes. He attended the University of Michigan, where he studied economics and writing, and now lives in Brooklyn.While passionate about editing and helping lead the newsroom's daily business coverage, he also puts on his reporting hat every now and then to chase down a scoop — so don't hesitate to reach out!Have a news tip? Email Steven from a non-work email at [email protected] him on X and Threads for the latest.Featured work:▲Leaked memo: Wayfair CEO tells employees to expect long hours 'blending work and life' (scoop) ▲ Magic Leap's CFO is stepping down after it was 'mutually decided' it was time for someone new (scoop)▲ 48 hours after raising $500 million, Magic Leap called the cops to say an employee had stolen $1 million (scoop)▲ A conversation with the father of virtual reality about the changing culture of Silicon Valley▲ The future of virtual reality is here▲ The first details on the executive shakeup planned for Yahoo once its deal with Verizon closes (scoop)▲ What it's like to log in to computers in North Korea, which run look-alike Mac software called 'Red Star 3.0'
Microsoft (MSFT 3.48%) stock slipped 2.5% through 2:25 p.m. ET Thursday after Stifel analyst Brad Reback lowered his price target on the tech stock this morning, and maintained only a "hold" rating.
Reback thinks Microsoft stock is worth $400 a share -- and it costs less than $357 as of this writing -- but that's still not cheap enough to convince Reback to rate it a "buy."
Image source: Microsoft.
Why not buy Microsoft stock? Why not buy Microsoft at a 12% discount to its real value? Primarily, because Microsoft may disappoint a lot of investors when it reports earnings next month.
Earnings are due out on July 29, and the consensus is that Microsoft will earn a healthy $4.24 per share this quarter -- up 16% year over year. That sure sounds good, but be warned, says Reback. Microsoft's Azure computing business is growing four times as fast as the rest of the business and represents an ever-larger percentage of the company's total business. Again, this sounds good, but gross margins at Azure are compressing as Microsoft spends heavily in the artificial intelligence race.
Reback forecasts that "thanks" to Azure, Microsoft's fiscal 2027 gross margins will decline 4.5 percentage points from last year, to 63%, and miss consensus targets by at least 300 basis points.
Today's Change
(
-3.48
%) $
-12.70
Current Price
$
352.76
What it means for Microsoft stock More and more revenue coming from a division that's suffering increasingly worse-than-average profit margins? That most certainly does not sound like good news for Microsoft stock.
When viewed in conjunction with what's happening on the cash flow statement, where heavy capital spending on AI has left Microsoft with essentially no free cash flow growth at all for the past two years, and it's hard to make the argument that Microsoft stock is still worth buying.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.
SAN DIEGO, June 25, 2026 (GLOBE NEWSWIRE) -- Robbins LLP informs stockholders that a class action was filed on behalf of all investors who purchased or otherwise acquired Microsoft Corporation (NASDAQ: MSFT) securities between May 1, 2025 and January 28, 2026. Microsoft is one of the largest technology conglomerates in the world.
For more information, submit a form, email attorney Aaron Dumas, Jr., or give us a call at (800) 350-6003.
The Allegations: Robbins LLP is Investigating Allegations that Microsoft Corporation (MSFT) Misled Investors Regarding Copilot User Adoption and AI-Driven Growth Prospects
According to the complaint, during the class period, defendants touted the success of Microsoft’s AI initiatives, repeatedly representing that Copilot was experiencing strong adoption, increasing user engagement, growing seat purchases, and widespread enterprise acceptance, while emphasizing Azure’s AI-driven growth and Microsoft’s competitive position in artificial intelligence. Defendants allegedly portrayed Copilot as a significant growth driver while failing to disclose that the product suffered from substantial adoption, user experience, interoperability, and capacity-related problems, that Microsoft’s AI models lagged competitors on key benchmarks, and that the Company was diverting significant Azure computing resources and increasing AI-related spending to address those issues. As a result, Microsoft allegedly failed to convert a significant percentage of Microsoft 365 users into paid Copilot subscribers and lost market share to competing AI products.
Plaintiff alleges that the truth began to emerge on January 28, 2026, when Microsoft reported fiscal second-quarter 2026 results and disclosed slower-than-expected Azure growth, increased AI-related capital expenditures, and that Microsoft 365 Copilot seats totaled only 15 million, materially below analyst estimates. According to the complaint, Microsoft further revealed that Azure growth was impacted by capacity constraints resulting from resources being redirected to Copilot applications and AI-related research and development. On this news, Microsoft’s stock price fell from $481.63 per share on January 28, 2026, to $433.50 per share on January 29, 2026.
What Now: You may be eligible to participate in the class action against Microsoft Corporation. Shareholders who wish to serve as lead plaintiff for the class should contact Robbins LLP. The lead plaintiff is a representative party who acts on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member. For more information, click here.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
About Robbins LLP: A recognized leader in shareholder rights litigation, the attorneys and staff of Robbins LLP have been dedicated to helping shareholders recover losses, improve corporate governance structures, and hold company executives accountable for their wrongdoing since 2002.
To be notified if a class action against Microsoft Corporation settles or to receive free alerts when corporate executives engage in wrongdoing, sign up for Stock Watch today.
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A coalition of publishers of nearly 400 local and regional newspapers has filed a lawsuit against OpenAI and Microsoft, alleging copyright infringement.
The lawsuit alleges that the companies stole the newspapers’ copyrighted news articles, used that content to build and train commercial AI products, including ChatGPT and Microsoft Copilot, and reproduced or repurposed the content without permission or compensation, Platkin LLP, the law firm that filed the suit, said in a Wednesday (June 24) post on LinkedIn.
Platkin LLP was founded this year by former New Jersey Attorney General Matthew Platkin and a team of litigators from the attorney general’s office, according to the firm’s LinkedIn profile.
Matthew Platkin said in the post that the lawsuit “seeks to ensure these local publications creating original content will have meaningful protections in the AI era.”
“AI systems do not critically evaluate city council and community meetings,” Platkin said. “They don’t investigate local crimes and corruption, publish obituaries, or cover the new restaurant opening downtown. Local reporters do. This lawsuit is not about stopping AI innovation, but ensuring that innovation happens fairly and within the bounds of the law.”
Neither Microsoft nor OpenAI immediately replied to PYMNTS’ request for comment.
The New York Times filed a lawsuit against Microsoft and OpenAI in December 2023, alleging copyright infringement. The newspaper claimed the tech companies used its content without permission to develop their AI products.
Reached by PYMNTS at the time, an OpenAI spokesperson said the firm respects the right of content creators and owners and is “committed to working with them to ensure they benefit from AI technology and new revenue models.”
In December, a federal judge directed OpenAI to provide millions of anonymized ChatGPT logs in a copyright case brought by The New York Times and other media organizations. The publishers contended that the logs were necessary to determine whether the AI system reproduced protected articles.
OpenAI and Microsoft also face a copyright infringement lawsuit filed by a group of authors who accuse the companies of misusing the authors’ books to train AI software, while OpenAI faces a copyright infringement lawsuit filed by Encyclopedia Britannica and its subsidiary Merriam-Webster, who allege the company scraped their articles to train its AI.
Key Takeaways MSFT gaming revenues fell 7% to $5.34B as Xbox hardware revenues dropped 33% in fiscal Q3 2026.Microsoft linked content weakness to tough comparisons; results matched guided declines.MSFT is expanding cloud-delivered gaming via Game Pass, streaming and new first-party titles. Microsoft's (MSFT - Free Report) push to expand its gaming division through content and cloud-streaming investment is being weighed against a soft quarter for the segment, raising the question of whether Xbox can meaningfully reinforce the company's broader cloud ecosystem. The trigger: Xbox content and services revenues fell 5% year over year (down 7% in constant currency) in third-quarter fiscal 2026, while Xbox hardware revenues plunged 33%, dragging total gaming revenues down 7% to $5.34 billion. The decline landed inside an otherwise record quarter, with companywide revenues increasing 18% to $82.9 billion and Microsoft Cloud revenues rising 29% to $54.5 billion, highlighting the gap between gaming's trajectory and the rest of the portfolio.
Microsoft attributed the content and services shortfall to a difficult prior-year comparison that had benefited from strong first-party releases, while hardware weakness reflected lower console unit volumes as the current generation matures. CFO Amy Hood had guided for a mid-to-high single-digit decline in total gaming revenues and a mid-single-digit drop in content and services for the quarter; actual results landed at the softer end of that range, meaning the slide was in line with, not worse than, expectations.
Recent developments suggest Microsoft is leaning on cloud-delivered gaming to tie Xbox more closely to its broader ecosystem rather than console hardware. Xbox Wire's June 2026 Games Showcase introduced new first-party titles, including Ninja Theory's Senua, alongside a 25th-anniversary Xbox Series X|S console and controller edition launching in November. Game Pass' steady cadence of additions through June, such as Forza Horizon 6, Persona 5 Royal and Call of Duty: Vanguard, depends heavily on cloud streaming to reach players across devices. An April 2026 Game Pass Ultimate price adjustment had not yet been factored into fiscal third-quarter results and will first appear in fourth-quarter fiscal 2026 numbers.
With hardware revenues shrinking and cloud infrastructure carrying more of the gaming experience, the segment's expansion may matter less for standalone gaming revenues and more for keeping users anchored to Microsoft's cloud platform.
How Gaming Rivals Compare on GrowthUnlike Microsoft's gaming segment, Electronic Arts (EA - Free Report) and Take-Two Interactive (TTWO - Free Report) posted gains in their most recent quarterly results. Electronic Arts reported fourth-quarter fiscal 2026 net bookings of $1.86 billion, up roughly 4% year over year, with net revenues rising 12% to $2.12 billion on strength in Battlefield 6 and Apex Legends. Take-Two Interactive's fiscal fourth-quarter net bookings held flat at $1.58 billion, though GAAP net revenues grew 6% to $1.68 billion, supported by NBA 2K26 and the Grand Theft Auto franchise. Electronic Arts and Take-Two Interactive both leaned on live-service and recurrent consumer spending to offset slower title-driven growth that quarter, a contrast to Microsoft's subscription- and cloud-led approach. Neither Electronic Arts nor Take-Two Interactive operates console hardware, limiting direct comparability with Xbox's mixed results.
MSFT’s Share Price Performance, Valuation & EstimatesMSFT shares have lost 25% in the past six-month period compared with the Zacks Computer – Software industry’s decline of 26.1%. The Zacks Computer and Technology sector has appreciated 12.8% in the same time frame.
MSFT’s 6-Month Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, MSFT stock appears overvalued, trading at a forward 12-month price/earnings ratio of 18.98X, higher than the industry’s 18.81X. MSFT has a Value Score of D.
MSFT’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MSFT’s fiscal 2026 earnings is pegged at $17.33 per share. The estimate indicates 27.05% year-over-year growth.
Microsoft currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
European regulators say Amazon’s and Microsoft’s cloud businesses should fall under the Digital Markets Act (DMA).
The European Commission said in a Wednesday (June 24) press release that it had informed both tech giants of its preliminary finding that they should be considered “gatekeepers” under the DMA for their cloud computing services, Amazon Web Services (AWS) and Microsoft Azure.
“In both cases, the Commission preliminarily finds that AWS and Azure, the largest and second largest cloud computing services in the EU respectively, are an important gateway between businesses and their customers in the EU,” per the release. “This is the case despite them not meeting the DMA’s quantitative thresholds for designation.”
The DMA, which came into force in 2023, established stringent rules for major online platforms, designed to prevent anti-competitive behavior. The “gatekeeper” designation applies to companies with at least 45 million end users and 10,000 business users in Europe, and a yearly turnover of 7.5 billion euros across the continent for the previous three financial years.
Amazon and Microsoft have been given the gatekeeper designation for other services, but the commission said this label should also apply to their cloud business, which have “achieved significant turnover, and their operational capacity and investments seem to have significantly outpaced those of competitors.”
The EC also notes that AWS and Azure seem to have benefitted from increased AI-related demand for cloud services, and “appear to hold an entrenched and durable position in the EU cloud computing sector, as is evidenced by AWS and Azure’s leading market position over many years.”
A spokesperson for Microsoft said th company was still engaging “constructively” with the commission in a statement provided to PYMNTS.
“The cloud sector in Europe is innovative, highly competitive and an accelerator for growth across the economy,” the statement added. “We remain concerned that ignoring the growing power of Google Cloud and Gemini will tilt the market in a harmful way.”
Amazon issued a statement in response to the EC’s preliminary findings, arguing they “disregard the breadth of cloud services available to European customers and risk deterring European investment and innovation.
“AWS faces healthy competition and customers across Europe have more choice, lower prices, and greater flexibility than ever before,” the company said.
“The EU already has comprehensive cloud regulation through the Data Act, and adding another heavy layer of overlapping regulation under the DMA undermines European competitiveness and access to cutting-edge information technology.”
The company also cites a study published by Copenhagen Economics and commissioned by AWS which found more than 200 active European cloud providers that have held a roughly 15% share of revenue since 2022.
Credit: Unsplash/CC0 Public Domain The EU said Thursday that the cloud services of Amazon and Microsoft should face tougher digital competition rules in Europe because of their dominant position in the sector.
Amazon Web Services (AWS) and Microsoft's Azure are the largest and second-largest cloud computing services in the European Union, respectively.
"These services will only continue to grow in importance, which is why it is essential that we ensure a well-functioning and competitive market," EU antitrust commissioner Teresa Ribera said.
The EU opened a probe in November into whether AWS and Azure should come under the scope of the Digital Markets Act (DMA).
Despite not meeting quantitative thresholds like user numbers, the EU said it could apply the DMA regulations to firms with a "significant impact" on the market, and an entrenched and durable position—which it found that AWS and Azure appear to hold.
The DMA applies to services with more than 45 million monthly active end users in the EU and more than 10,000 yearly active business users.
The move risks further irking Washington, as the U.S. administration under President Donald Trump has railed against the rules, claiming they are an unfair trade barrier.
The companies can now argue against the EU's preliminary findings before a final decision, which could come later this year.
AWS hit out at the preliminary findings, saying they "disregard the breadth of cloud services available to European customers."
An AWS spokesperson said that the company faced "healthy competition" across Europe and that there were already "comprehensive" rules covering the sector.
"We will continue to engage with the commission to reach the right outcome for customers and Europe's digital future," the spokesperson said.
Microsoft said it continued "to engage constructively with the commission."
A spokesperson said the company was "concerned that ignoring the growing power of Google Cloud and Gemini will tilt the market in a harmful way."
U.S. cloud providers make up two-thirds of the EU market. Google Cloud is the third-largest player, but the EU opted not to launch a similar probe into it.
The DMA tells large technology firms it identifies as "gatekeepers" what they can and cannot do on their platforms.
For example, companies have to make sure their platforms are open to rivals to provide their services and allow users to delete any preinstalled apps.
Amazon's Marketplace and Microsoft's operating system already face DMA rules.
The EU is also investigating whether it needs to update the DMA.
Who's behind this story?
Andrew Zinin Master's in physics with research experience. Long-time science news enthusiast. Plays key role in Science X's editorial success. Full profile →
Citation: EU says Amazon, Microsoft cloud services should face stricter rules (2026, June 25) retrieved 25 June 2026 from https://techxplore.com/news/2026-06-eu-amazon-microsoft-cloud-stricter.html
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by Kurt Schlosser on Jun 25, 2026 at 8:50 amJune 25, 2026 at 8:50 am
(Raiseus.ai Image) Amazon, Microsoft and other leading tech companies are joining a new nonpartisan workforce organization launched Thursday aimed at helping American workers navigate the transition to an AI-driven economy.
RAISE US aims to partner with governors, employers, and training organizations to retrain and redeploy workers displaced or affected by AI, with a goal of raising $1 billion in multi-year commitments — more than half of which has already been secured.
The organization is led by former U.S. Commerce Secretary Gina Raimondo, who will serve as CEO, and former Indiana Gov. Eric Holcomb, who will serve as co-chair. The two are pitching the effort as explicitly bipartisan.
“If we build the best AI systems in the world and leave millions of Americans behind, we won’t have won anything; we’ll have automated our own decline,” Raimondo said in a news release. “I believe AI will create new jobs and industries over time, but the transition could be disruptive, and it’s already underway.”
Amazon, Anthropic, Microsoft and the OpenAI Foundation are serving as anchor partners. The coalition also includes more than two dozen companies and philanthropies, among them IBM, Cisco, General Motors, Mastercard, the Rockefeller Foundation, and Pivotal, the organization founded by Melinda French Gates. Initial state partnerships include Arkansas, Connecticut, Maryland, and Utah.
The launch of RAISE US comes amid layoffs and cost-cutting across the tech industry and widespread anxiety — from workers to recent graduates — about AI’s impact on employment. Some employers, including Meta, have cited AI as a reason for cuts, including in Washington state. Amazon CEO Andy Jassy blamed massive layoffs that started last year on a culture correction at the tech giant rather than being AI-driven.
In a blog post Thursday, Amazon Chief Global Affairs & Legal Officer David Zapolsky said investment in workers must keep pace with the technology.
“The transition to an AI-driven economy will create enormous opportunity, but only if we invest now in helping workers develop the skills to seize it,” Zapolsky wrote.
Zapolsky cited Amazon’s own efforts to prepare workers for the AI economy, including its Career Choice program, which has helped more than 300,000 employees earn degrees and certificates over 14 years, and a broader $2.5 billion commitment to skills training through its Future Ready 2030 initiative.
Microsoft said it has already been piloting a model for the kind of worker transition RAISE US aims to scale — cross-training entry-level lawyers across different parts of the organization and equipping them with AI skills so they can be repositioned as technology evolves, The New York Times reported.
“It creates an opportunity to transfer people from jobs that are being eliminated to jobs that are being created,” Microsoft President Brad Smith told the Times.
LOS ANGELES--(BUSINESS WIRE)--Glancy Prongay Wolke & Rotter LLP reminds investors of the upcoming August 11, 2026 deadline to file a lead plaintiff motion in the class action filed on behalf of investors who purchased or otherwise acquired Microsoft Corporation (“Microsoft” or the “Company”) (NASDAQ: MSFT) common stock between May 1, 2025 and January 28, 2026, inclusive (the “Class Period”).IF YOU SUFFERED A LOSS ON YOUR MICROSOFT INVESTMENTS, CLICK HERE TO INQUIRE ABOUT POTENTIALLY PURSUING.
New York, New York--(Newsfile Corp. - June 25, 2026) - Bronstein, Gewirtz & Grossman, LLC, a nationally recognized investor-rights law firm, announces that a class action lawsuit has been filed against Microsoft Corporation (NASDAQ: MSFT) and certain of its officers.
This lawsuit seeks to recover damages against Defendants for alleged violations of the federal securities laws on behalf of all persons and entities that purchased or otherwise acquired Microsoft securities between May 1, 2025 and January 28, 2026, both dates inclusive (the "Class Period"). Such investors are encouraged to join this case by visiting the firm's site: bgandg.com/MSFT.
Microsoft Case Details
The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements because they failed to disclose that:
Microsoft's Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; Microsoft's flagship proprietary AI model ranked well below competitors on a number of benchmark tests; Microsoft needed to increase by billions of dollars its capital expenditures and divert graphics processing unit ("GPU") and central processing unit ("CPU") capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related research and development ("R&D"); and as a result of the above, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and Microsoft's Copilot offerings had lost market share to rival products, a trend that was increasing.What's Next for Microsoft Investors?
A class action lawsuit has already been filed. If you wish to review a copy of the Complaint, you can visit the firm's site: bgandg.com/MSFT, or you may contact Peretz Bronstein, Esq. or his Client Relations Manager, Nathan Miller, of Bronstein, Gewirtz & Grossman, LLC at 917-590-0911. If you suffered a loss in Microsoft you have until August 11, 2026, to request that the Court appoint you as lead plaintiff. Your ability to share in any recovery doesn't require that you serve as lead plaintiff.
No Cost to Microsoft Investors
We, Bronstein, Gewirtz & Grossman LLC, represent investors in class actions on a contingency fee basis. That means we will ask the court to reimburse us for out-of-pocket expenses and attorneys' fees, usually a percentage of the total recovery, only if we are successful.
Why Bronstein, Gewirtz & Grossman, LLC for Microsoft Securities Class Action?
Bronstein, Gewirtz & Grossman, LLC is a nationally recognized firm that represents investors in securities fraud class actions and shareholder derivative suits. Our firm has recovered hundreds of millions of dollars for investors nationwide. More at www.bgandg.com
"Our practice centers on restoring investor capital and ensuring corporate accountability, which serves to uphold the essential integrity of the marketplace," said Peretz Bronstein, Founding Partner of Bronstein, Gewirtz & Grossman, LLC.
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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/301523
Source: Bronstein, Gewirtz & Grossman, LLC
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Microsoft (NASDAQ:MSFT | MSFT Price Prediction) has been one of the cleanest setups in mega-cap tech this year. After a sharp pullback from last summer’s highs, the stock now trades where the analyst community, prediction markets, and our model align. Our 24/7 Wall St. price target for Microsoft is $486.23, and our confidence in that number is high.
The 24/7 Wall St. Price Target at a Glance Metric Value Current Price $365.46 24/7 Wall St. Price Target $486.23 Upside 33.05% Recommendation BUY Confidence Level 90% That implied 33% upside over the next 12 months reflects a stock punished by the broader AI capex debate while the underlying business keeps compounding. With 52 Buy ratings against 3 Hold and 0 Sell, Microsoft enjoys near-unanimous Wall Street support.
A 25% Drawdown Despite Accelerating Fundamentals Microsoft is down 24.83% over the past year and 24.1% year to date, with a 12.69% slide in the past month alone. Shares sit roughly 2% off the 52-week high of $551.05 after retracing from $520 in August 2025.
The fundamentals tell a different story. Q3 FY26, reported April 29, 2026, delivered EPS of $4.27 against a $4.07 estimate and revenue of $82.89 billion, up 18.3% year over year.
Azure grew 40%, Microsoft Cloud reached $54.5 billion, and CEO Satya Nadella highlighted that “our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.” Commercial RPO sits at $627 billion, up 99%.
Why Bulls See a Breakout Ahead The bull case rests on Azure and Copilot monetization compounding faster than sell-side models. With OpenAI committed to $250 billion of additional Azure spending and Microsoft holding a 27% OpenAI stake worth roughly $135 billion, the revenue pipeline is pre-funded.
Vanguard’s 2026 outlook notes that “U.S. technology stocks could well maintain their momentum given the rate of investment and anticipated earnings growth.” The Street’s average target of $561.39 is well above our base case, and our bull scenario points to $599.61, a 64% return.
What Could Go Wrong Microsoft’s CapEx hit $30.88 billion in Q3 FY26, up 84.39% YoY, and OpenAI investment losses ballooned to $3.1 billion in Q1 FY26 from $523 million a year earlier. If AI ROI disappoints, multiple compression follows.
Insiders have been net sellers across 33 recent transactions, and prediction markets assign just 31.5% odds that Microsoft’s valuation tops Anthropic plus OpenAI by year-end. Bulls counter that heavy CapEx funds the $627 billion backlog driving Azure’s growth. Our bear case lands at $436.35, a 19.4% gain.
Microsoft Price Prediction 2026-2030 My recommendation is buy with 90% confidence, anchored to the 24/7 Wall St. price target of $486.23. At a 26 P/E with 33% ROE and 40% Azure growth, Microsoft is cheaper than its growth profile deserves.
The bull thesis depends on Azure holding 30%+ growth into FY27. The bear thesis hinges on AI CapEx outrunning monetization for another two years.
Here is where the 24/7 Wall St. price target model projects Microsoft could trade, assuming current growth trajectories hold.
Year 24/7 Wall St. Price Target 2026 $415 2027 $486 2028 $572 2029 $673 2030 $791 These projections assume Azure and Copilot continue compounding at current rates. Significant upside or downside could result from the pace of AI monetization and OpenAI’s economics flowing back to Microsoft’s bottom line.
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Former Commerce Secretary Gina Raimondo is leading a new nonprofit, backed by some of the biggest names in tech and AI, that aims to better prepare the workforce for what is coming. Mandel Ngan/AFP via Getty Images Some of the biggest names in tech and AI are behind a new organization with ambitious plans to help workers navigate the AI transition.
The OpenAI Foundation, Anthropic, Amazon, and Microsoft are all "anchor partners" on Raise US, a new nonprofit that aims to raise $1 billion to build a national platform to advise governors on how best to prepare their workforces for AI disruption. According to the organization, they have already raised $500 million. (The OpenAI Foundation was a nonprofit created as part of OpenAI's restructuring, which holds a $100 billion equity stake in OpenAI's for-profit arm.)
"America has a technology strategy for leading the global AI competition. It does not yet have a people strategy — and we cannot lead without one," former Commerce Secretary Gina Raimondo, who is leading the group, said in a statement announcing the initiative.
Raise US' initial partnerships are with Arkansas, Connecticut, Maryland, and Utah, an even split between states run by Republican and Democratic governors.
"By working directly with state governments to pilot and scale new workforce models, we can move faster and reach more people than any of us could independently," David Zapolsky, Amazon's chief global affairs and legal officer, wrote in a post explaining the partnership.
In Arkansas, the group is working with Gov. Sarah Huckabee Sanders to stand up an "AI-powered career navigation platform called Arkansas LAUNCH that connects students and job seekers to personalized learning and employer-linked career pathways."
In Maryland, Raise US is working with Gov. Wes Moore to expand service-years for recent high school graduates into fields such as healthcare and education.
Of the initial group, Utah may be one of the most interesting. The state has found itself at the center of backlash over the buildout of AI data centers. Shark Tank star Kevin O'Leary scaled back his proposed data center by nearly half after intense public backlash and political pressure.
The organization said more states will join in the coming months. Elsewhere, Raise US said it wants to work on "real-world pilots" for policies like "short-time compensation and wage insurance."
Raimondo, who was governor of Rhode Island before joining the Biden administration, is leading the effort alongside former Indiana Gov. Eric Holcomb. David Sze, a partner at Greylock, is among the four people who will serve on the organization's board of directors.
In addition to the AI partners, the Raise US advisory board includes a who's who of Corporate America, politics, labor, philanthropy, and economics, including Laurene Powell Jobs, Blackstone CEO Steve Schwarzman, Bank of America co-President Jim DeMare, former IBM CEO Samuel Palmisano, former House Speaker Paul Ryan, AFL-CIO President Liz Shuler, and renowned economist Raj Chetty.
The extent to which AI will disrupt the labor market is hotly contested. Anthropic CEO Dario Amodei has been outspoken in his warnings that AI could eliminate up to half of all entry-level white-collar jobs over the next 1 to 5 years.
AI and tech CEOs have recently sought to pivot away from the job "apocalypse" discussion amid concerns that the rhetoric has fueled AI's declining popularity in the US. OpenAI CEO Sam Altman went so far as to say he was "delighted to be wrong about this."
"I thought that there would have been more impact on entry-level white-collar work jobs being eliminated by now than it's actually happened," Altman said during a May event hosted by the Commonwealth Bank of Australia.
Read next
Brent D. Griffiths You're currently following this author! Want to unfollow? Unsubscribe via the link in your email.
Brent Griffiths is a senior reporter at Business Insider who covers AI and tech.Previously, he worked at the Washington Post as a researcher on Power Up and the Finance 202. He started his career at Politico where he worked on the web production team and covered breaking news. His passion for covering politics has only grown since he cut his teeth covering the presidential campaign as a student journalist. He's also contributed to the Almanac of American Politics.
European Union antitrust regulators have said Amazon (AMZN) and Microsoft (MSFT) cloud divisions should be designated as tech gatekeepers under the bloc's rules
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
Microsoft co-founder Bill Gates departs after a closed-door interview with the House Oversight Committee on Capitol Hill in Washington, DC, on June 10, 2026. (Photo by Kent NISHIMURA / AFP via Getty Images)
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This article was written by Doug Nathman, with research by his team at Trefis.
Over the past five years, Microsoft (MSFT) shares have generated a staggering $223 Bil return to its investors in the form of cash through dividends and stock repurchases. This remarkable ability to return capital stems from Microsoft's development into a high-margin giant, primarily fueled by its leadership in cloud services and enterprise software. The corporation’s capacity to generate such considerable “payout power” is supported by strong, recurring revenue sources from its Intelligent Cloud division, particularly Azure, along with the significant, dependable cash flows produced by its Microsoft 365 suite. By adhering to strict operational standards while aggressively expanding its AI-driven capabilities, Microsoft has transformed its fundamental business into a dependable cash-generating machine that enables it to drive extensive innovation and consistently reward shareholders at the same time.
Interestingly, MSFT shares have provided the third highest returns to shareholders in history.
MSFT Stock Returns
Trefis
Why is this important? Because dividends and share buybacks provide direct, tangible returns to investors. They also reflect management's faith in the company's fiscal stability and capacity to produce ongoing cash flows. Moreover, there are additional stocks with similar attributes. Below is a compilation of the top 10 firms sorted by total capital returned to investors through dividends and stock repurchases.
Top 10 Stocks By Overall Shareholder ReturnTop 10 Stocks By Overall Shareholder Return
Trefis
For the complete rankings, check Buybacks & Dividends Ranking
MORE FOR YOU
What stands out here? The total capital returned to shareholders as a % of current market capitalization appears inversely related to growth opportunities for reinvestment. Companies like Meta (META) and Microsoft (MSFT) are expanding at a much quicker and more predictable rate compared to their peers, but they have returned a significantly smaller proportion of their market value to shareholders.
That illustrates the trade-off associated with high capital returns. While they are enticing, one must ponder: Am I compromising growth and solid fundamentals?
Microsoft's FundamentalsRevenue Growth: 17.9% LTM and a 15.3% average over the last three years.Cash Generation: Almost 22.9% free cash flow margin paired with a 46.8% operating margin LTM.Recent Revenue Fluctuations: The lowest annual revenue growth MSFT experienced in the last three years was 14.0%.Valuation: Microsoft shares are traded at a P/E ratio of 21.8.MSFT vs. S&P Median
Trefis
The table provides a helpful summary of what you receive from MSFT stock versus the median S&P 500, but evaluating against its own peers is equally crucial.
MSFT Historical RiskThere are no benefits without costs. In terms of buybacks and dividends, shareholders are compensated for “staying invested.” And that can be challenging. Even the strongest convictions are tested during periods of market volatility, which is best demonstrated by examining how significantly MSFT stock has dropped during past market downturns.
Remaining invested in the market is the only path to achieving returns. The specific mechanism is unimportant. Whether it be fundamental price appreciation, share buybacks, or dividends, the market does not reward you for remaining an observer. So how can you invest and remain invested? The solution is straightforward: through a “Portfolio” strategy.
The Trefis High Quality Portfolio (HQ) is crafted to keep you engaged. By diversifying your exposure across 30 premium stocks, it mitigates the “all-or-nothing” risk associated with a single stock. It softens the intense, stomach-churning declines while preserving the potential for growth.
Under the Digital Markets Act, the companies would be treated as gatekeepers for their cloud computing services and required to take extra steps to ensure they don't stifle competition.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of GOOG, GOOGL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
The logo of Amazon is seen at the company's logistics center in Bretigny-sur-Orge, near Paris, France, November 28, 2025. REUTERS/Stephanie Lecocq Purchase Licensing Rights, opens new tab
CompaniesBRUSSELS, June 25 (Reuters) - Amazon (AMZN.O), opens new tab and Microsoft's (MSFT.O), opens new tab cloud computing services should be designated gatekeepers under EU rules aimed at reining in the power of Big Tech, EU antitrust regulators said on Thursday.
Amazon Web Services and Microsoft Azure, the two largest cloud providers globally, should be designated gatekeepers under the Digital Markets Act which sets out a list of dos and don'ts to ensure a level playing field, the European Commission said.
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The preliminary findings by the EU competition enforcer came after a seven-month long investigation.
Amazon said the preliminary assessment disregard the breadth of cloud services available to European customers and risk deterring European investment and innovation.
Microsoft pointed to its rival Google's growing power.
"We remain concerned that ignoring the growing power of Google Cloud and Gemini will tilt the market in a harmful way," a Microsoft spokesperson said.
Reporting by Foo Yun Chee; Editing by Sudip Kar-Gupta
Our Standards: The Thomson Reuters Trust Principles., opens new tab
WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of common stock of Microsoft Corporation (NASDAQ: MSFT) between May 1, 2025 and January 28, 2026, inclusive (the “Class Period”), of the important August 11, 2026 lead plaintiff deadline.
SO WHAT: If you purchased Microsoft common stock during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.
WHAT TO DO NEXT: To join the Microsoft class action, go to https://rosenlegal.com/cases/microsoft-corporation/join or call Phillip Kim, Esq. toll-free at 866-767-3653 or email [email protected] for information on the class action. A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than August 11, 2026. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.
WHY ROSEN LAW: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources, or any meaningful peer recognition. Many of these firms do not actually handle securities class actions, but are merely middlemen that refer clients or partner with law firms that actually litigate the cases. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm has achieved, at that time, the largest ever securities class action settlement against a Chinese Company. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered hundreds of millions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs’ Bar. Many of the firm’s attorneys have been recognized by Lawdragon and Super Lawyers.
DETAILS OF THE CASE: According to the lawsuit, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) Microsoft’s Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; (2) Microsoft’s flagship proprietary AI model ranked well below competitors on a number of benchmark tests; (3) Microsoft needed to increase by billions of dollars its capital expenditures and divert graphics processing unit (“GPU”) and central processing unit (“CPU”) capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related research and development (“R&D”); and (4) as a result, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and Microsoft’s Copilot offerings had lost market share to rival products, a trend that was increasing. When the true details entered the market, the lawsuit claims that investors suffered damages.
To join the Microsoft class action, go to https://rosenlegal.com/cases/microsoft-corporation/join or call Phillip Kim, Esq. toll-free at 866-767-3653 or email [email protected] for information on the class action.
No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.
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HANOI, Vietnam--(BUSINESS WIRE)--FPT Corporation today announced an expanded strategic collaboration with Microsoft aimed at accelerating enterprise AI adoption and co‑innovation across Asia, with a strong focus on ASEAN, Japan, and South Korea. The collaboration brings together Microsoft’s global AI platforms with FPT’s large‑scale delivery and regional market capabilities to support organizations as they move from AI experimentation to real‑world, scalable impact, with measurable business outcomes.
The collaboration aligns with FPT’s AI‑First strategy and Microsoft’s vision for human‑agent collaboration, with the goal of enabling enterprises to redesign how work is done across engineering, operations, and business functions.
Positioning FPT as an AI Frontier Company
As part of the collaboration, FPT will work closely with Microsoft as an AI Frontier Company - a new type of organization defined as human-led and agent-operated, seamlessly embedding AI agents into everyday workflows and core processes, while exploring early adoption of Microsoft’s next‑generation AI technologies and joint co‑innovation around generative and agentic AI. This includes early roadmap alignment, experimentation with emerging AI capabilities, and the development of reference architectures and industry showcases designed for enterprise scale.
Equipped with 30,000 AI-augmented engineers across its global presence, FPT is continuing to prioritize Microsoft platforms as part of its internal AI transformation, with a focus on Microsoft 365 Copilot and GitHub Copilot. As part of this journey, the Corporation is working toward equipping up to 20,000 developers with agentic development capabilities over the next three years, supporting the development of an AI‑augmented workforce and modern engineering practices in order to accelerate AI transformation for FPT’s global clients.
Through this elevated collaboration, which also serves as a pathway for more strategic future engagement models towards 2030, FPT aims to serve as a long‑term reference organization and early adopter of Microsoft’s AI platforms - demonstrating how enterprises can move beyond productivity gains to fundamentally redesign workflows around human‑AI collaboration.
“As enterprises move from AI experimentation to enterprise‑wide adoption, the challenge is no longer technology alone — it is scale, resilience, and execution,” said Nguyen Van Khoa, CEO of FPT Corporation. “Through our deepened collaboration with Microsoft, FPT is enabling global enterprises to accelerate AI transformation across different stages of maturity — from early exploration to AI-enabled workforce productivity and upskilling, to the integration of AI into core processes and fully AI‑native operations — strengthening cybersecurity readiness, accelerating cloud and recovery architectures, and improving cost efficiency through productivity‑led digital and AI transformation. We are committed to enabling clients to move faster, operate more intelligently, and scale AI capabilities wherever their business operates.”
Driving joint go‑to‑market impact across Asia and Supporting national AI ambitions
The collaboration between Microsoft and FPT also establishes a structured Pathfinder approach to deepen joint engagement across priority Asian markets. This includes executive sponsorship, joint governance, investment and coordinated market initiatives across regions, designed to help enterprises adopt AI in a practical, scalable, and repeatable way, as well as joint capability-building initiatives across leadership, sales, and delivery teams.
Together, the two organizations will focus on building AI adoption models that can be deployed across industries - supporting enterprises as they transition from isolated pilots to enterprise‑wide AI transformation, enabled by Microsoft’s technical expertise, enablement programs, and co‑innovation resources.
Mayank Wadhwa, President of Microsoft ASEAN, said: “Vietnam is stepping into a pivotal phase of AI adoption, where organizations are ready to scale beyond pilots and redesign how work gets done. AI Frontier organizations, human‑led and agent‑operated, will define this next chapter. By combining Microsoft’s trusted global AI platforms with FPT’s large-scale capabilities and deep engineering strength, we are helping Vietnamese enterprises accelerate this transformation with safety, responsibility, and real impact.”
The two sides are also aligned in supporting Vietnam’s ambition to become an AI Frontier Government. Areas of collaboration include joint thought leadership, capability building, policy‑aligned solution frameworks, and ecosystem engagement - combining Microsoft’s global AI platforms with FPT’s local delivery and government engagement expertise, in alignment with Vietnam’s national priorities and regulatory considerations.
FPT and Microsoft established their relationship in 1996 and have since collaborated on a broad range of technology initiatives, from e‑government, taxation, customs, and hospital management systems to enterprise modernization programs. Over three decades, the relationship has continued to evolve in both scope and capability, with FPT building strong expertise across the Microsoft ecosystem to support large-scale deployments for global enterprises.
Backed by more than 3,000 Microsoft-certified engineers, FPT has further strengthened its position in AI-led transformation through specializations in AI, Machine Learning, and Kubernetes on Microsoft Azure. In 2026, the Corporation became the first Microsoft Enterprise System Integrator in Southeast Asia to achieve Frontier Partner designation - one of the most selective tiers in the Microsoft ecosystem - recognizing its proven track record in delivering end-to-end AI and cloud transformation at scale for global enterprises. More recently, FPT was also named a Microsoft AI Discovery Cards Featured Partner globally, underscoring its capabilities in helping enterprises translate AI ambition into actionable strategies and scalable implementation roadmaps.
To further affirm its commitment to enterprise-grade AI transformation, FPT also recently introduced FPT CASAN, a comprehensive AI transformation methodology designed to help organizations move from fragmented experimentation to scalable, real-world AI deployment. Built on a five-level AI-native framework - Curious, Augmented, Standard, Automatic, and Native - FPT CASAN provides a structured roadmap to assess readiness, strengthen governance, and operationalize AI across core functions, addressing siloed solutions and unstructured data to enable cohesive, outcome-driven adoption while unlocking efficiency and long-term competitive advantage.
About FPT
FPT Corporation (FPT) is a globally leading Vietnam-headquartered technology and IT services provider, with operations spanning more than 30 countries and territories. Over more than three decades, FPT has consistently delivered impactful solutions to millions of individuals and tens of thousands of organizations worldwide. With a strong focus on mastering strategic technologies, FPT continues to drive innovation across industries. As an AI-first company, FPT is committed to elevating Vietnam’s position on the global tech map and delivering world-class AI-enabled solutions for global enterprises. In 2025, FPT reported a total revenue of USD 2.66 billion and a workforce of over 54,000 employees across its core businesses.
For more information about FPT's global IT services, please visit https://fptsoftware.com.
New York, New York--(Newsfile Corp. - June 24, 2026) - WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of common stock of Microsoft Corporation (NASDAQ: MSFT) between May 1, 2025 and January 28, 2026, inclusive (the "Class Period"), of the important August 11, 2026 lead plaintiff deadline.
SO WHAT: If you purchased Microsoft common stock during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.
WHAT TO DO NEXT: To join the Microsoft class action, go to https://rosenlegal.com/cases/microsoft-corporation/join or call Phillip Kim, Esq. toll-free at 866-767-3653 or email [email protected] for information on the class action. A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than August 11, 2026. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.
WHY ROSEN LAW: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources, or any meaningful peer recognition. Many of these firms do not actually handle securities class actions, but are merely middlemen that refer clients or partner with law firms that actually litigate the cases. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm has achieved, at that time, the largest ever securities class action settlement against a Chinese Company. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered hundreds of millions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs' Bar. Many of the firm's attorneys have been recognized by Lawdragon and Super Lawyers.
DETAILS OF THE CASE: According to the lawsuit, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) Microsoft's Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; (2) Microsoft's flagship proprietary AI model ranked well below competitors on a number of benchmark tests; (3) Microsoft needed to increase by billions of dollars its capital expenditures and divert graphics processing unit ("GPU") and central processing unit ("CPU") capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related research and development ("R&D"); and (4) as a result, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and Microsoft's Copilot offerings had lost market share to rival products, a trend that was increasing. When the true details entered the market, the lawsuit claims that investors suffered damages.
To join the Microsoft class action, go to https://rosenlegal.com/cases/microsoft-corporation/join or call Phillip Kim, Esq. toll-free at 866-767-3653 or email [email protected] for information on the class action.
No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. An investor's ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.
Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm, on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm/.
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Microsoft Corporation is rated a Strong Buy as shares trade 20%–25% below 5-year valuation averages despite robust growth. MSFT's data center investments are driving revenue acceleration, with performance obligations doubling to $633 billion and strong operating margin expansion. Azure and Productivity segments exhibit high-teens growth, with Copilot and Fabric platforms scaling rapidly and deepening the company's competitive moat.
Mid-year 2026 is a stress test for long-term conviction. The S&P’s mega-cap leaders have diverged sharply this year, with Microsoft giving back gains as AI capex skeptics resurface, Visa drifting on litigation noise, and Apple riding the iPhone 17 cycle. For investors thinking in decades rather than quarters, that divergence is the opportunity. The three names below share the only trait that matters for compounding: durable moats, fortress balance sheets, and capital return programs that turn time into the investor’s ally.
The case here is owning the businesses through cycles, with no pretense of timing a lump-sum entry.
Microsoft Microsoft (NASDAQ:MSFT | MSFT Price Prediction) trades at $373.20 after a brutal first half, down 22% year-to-date. The drawdown reflects AI capex anxiety, not deteriorating fundamentals. Q3 FY26 results filed April 29, 2026 showed EPS of $4.27 against a $4.07 consensus, the fourth straight quarter meeting expectations, on revenue of $82.89 billion, up 18% year-over-year.
The AI engine is real. Azure grew 40%, the AI business hit a $37 billion annual run rate (up 123% year-over-year), and commercial remaining performance obligations climbed to $627 billion. CEO Satya Nadella framed the moment plainly: “Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.” Roughly 65% of Fortune 500 companies now use Azure OpenAI services, anchoring the enterprise franchise for the next decade.
Forward P/E sits at roughly 23, with a base-case 1-year target of $483.97 and Wall Street’s mean target at $561.39, supported by 95% bullish analyst consensus with zero sell ratings.
The risk: capex reached $30.88 billion in the quarter, up 84% year-over-year, compressing free cash flow until AI monetization fully scales. The More Personal Computing segment also declined 1%. For long-duration holders, that is the price of building the next compute platform.
Visa Visa (NYSE:V) is the toll booth on global commerce. The stock closed at $330.36, off 6% year-to-date, but the fundamentals tell a different story. Q1 FY26 delivered non-GAAP EPS of $3.17 against a $3.14 consensus on revenue of $10.90 billion, up 15%. Processed transactions hit 69.4 billion, cross-border ex-intra-Europe volume grew 11%, and data processing revenue jumped 17%.
Visa processes over 200 billion transactions annually and operates a near-duopoly with massive switching costs. CEO Ryan McInerney called it a “payments hyperscaler” in the Q1 call, and the capital return engine confirms the model: Visa repurchased about 11 million shares at an average of $342.13 with $21.1 billion still authorized, and declared a $0.670 quarterly dividend. The company has raised its dividend for 15-plus consecutive years.
Forward earnings imply a P/E near 28, with analyst consensus at 92% bullish and a target of $398.83. Earnings growth ran 36% year-over-year, and beta of 0.77 makes Visa a lower-volatility compounder.
The risk: Q1 carried a $707 million interchange MDL litigation provision, the latest in a recurring series. Regulatory scrutiny on interchange and competition from stablecoins and fintech rails remain structural overhangs, though neither has bent the volume curve yet.
Apple Apple (NASDAQ:AAPL) trades at $295.28, up 8% year-to-date and 47% over the past year. The iPhone 17 super-cycle is doing exactly what bulls predicted. Q2 FY26 revenue hit $111.18 billion, up 17%, with EPS of $2.01 against a $1.94 estimate, the eighth consecutive quarterly beat.
iPhone revenue printed a March-quarter record at $56.99 billion, Services hit an all-time high of $30.98 billion, and every geographic segment grew double digits. Tim Cook described it as the “best March quarter ever” driven by “extraordinary demand for the iPhone 17 lineup.” The installed base now exceeds 2.5 billion active devices, the high-margin Services flywheel that anchors the long-term thesis.
Capital return remains aggressive: management authorized a fresh $100 billion buyback and raised the dividend 4% to $0.27 per share. Apple generates over $100 billion in annual free cash flow and remained Berkshire Hathaway’s largest holding at 22% of the Q1 2026 portfolio per the 13F filed May 15, 2026.
The risk: at a P/E near 39, Apple is the most expensive of the three on trailing earnings, and the iPhone still accounts for roughly half of revenue. Tariff and component-concentration risk in China remains an unresolved variable, even as Greater China revenue reaccelerated to $25.53 billion.
What to Watch Into the Second Half Three earnings cycles before year-end will tell investors whether the compounding thesis is intact: Microsoft’s Q4 print should clarify AI capex returns; Visa’s next quarter will test cross-border resilience as consumer spending normalizes; Apple’s September event and holiday quarter will determine how much of the iPhone 17 cycle has been pulled forward. The investing edge comes from owning the names through those windows, not trading around them.
Investors have spent much of the past year debating whether Big Tech’s massive artificial intelligence spending spree is getting out of hand. Chamath Palihapitiya thinks they’re asking the wrong question.
Instead, he says the companies are pouring cash into one of the largest infrastructure buildouts in technology history. “Capex has exploded,” Palihapitiya wrote, arguing that investors should not confuse lower free cash flow with weaker operating performance.
The Free Cash Flow MisunderstandingAt a basic level, free cash flow equals operating cash flow minus capital expenditures.
Palihapitiya noted that operating cash flow remains strong across the hyperscalers. What has changed is the amount of money being spent on AI infrastructure, including data centers, chips, networking equipment and power systems.
As a result, free cash flow has come under pressure—not because the businesses are generating less cash, but because they’re spending more of it.
The distinction matters.
Investors often view declining free cash flow as a warning sign. Palihapitiya argues that in this case, it may actually reflect an aggressive investment cycle.
Think Amazon, Not Quarterly EarningsTo make his point, Palihapitiya pointed to Amazon.com Inc. (NASDAQ:AMZN).
For years, Amazon reinvested heavily in logistics infrastructure and Amazon Web Services, sacrificing near-term profitability to build long-term competitive advantages. Today, AWS is one of the most profitable businesses in technology.
Palihapitiya believes the current AI buildout could follow a similar pattern.
“The question should be what moat did Amazon create at the end of that cycle and what kind of moat could the hyperscalers build now related to AI after this cycle?” he wrote.
Who Benefits If He’s Right?The answer could extend well beyond Microsoft, Alphabet and Meta.
The hyperscalers are collectively spending hundreds of billions of dollars on AI infrastructure, creating demand across the supply chain.
For investors, the debate may ultimately come down to whether AI spending should be viewed as a cost or an investment.
Palihapitiya’s view is clear: the hyperscalers aren’t bleeding cash. They’re building moats.
Image via Shutterstock
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A new critique in the scientific journal Nature is raising fresh questions about Microsoft's claimed quantum computing breakthrough last year, which underpinned the company's announcement this month that it will have a working quantum system by 2029.
Meta and Microsoft are leading the pack of tech giants that are shoveling money into artificial intelligence data-center leases – each committing tens of billions of dollars in their most recent quarters, according to a report.
The new agreements helped lift total future data-center lease commitments among the largest cloud-computing companies to more than $850 billion, Bloomberg reported.
The obligations have continued to rise over the past year as tech firms build out server farms to power an expected boom in AI use in coming years.
Tech giants are ramping up spending on power hungry server farms to power AI. Bloomberg via Getty Images
Mark Zuckerberg, chief executive officer of Meta Platforms Inc., seen wearing Orion augmented reality (AR) glasses. Bloomberg via Getty Images The lease commitments will largely be paid out over the next two decades, meaning spending on data center necessities like semiconductors and energy show no signs of slowing in the face backlash from some parts of the country.
Meta accounted for the biggest increase in data-center investment.
As of March 31, it had reportedly accumulated $182.9 billion in future lease obligations after adding $79 billion during the quarter – a 76% spike from the prior period.
Meta CEO Mark Zuckerberg has said he intends to invest hundreds of billions of dollars in AI infrastructure before the decade ends.
Microsoft’s future lease commitments rose by more than $41 billion, reaching $196.6 billion, according to Bloomberg. The company has been constrained by limited data-center capacity after scaling back its leasing through much of 2025.
Earlier this week, Microsoft unveiled a massive data center development in west Texas in partnership with Chevron.
Microsoft Chairman and CEO Satya Nadella speaks during a keynote address. Getty Images Amazon also ramped up its future lease obligations, reportedly committing $10 billion during the quarter, less than half the amount added in the prior quarter.
As of March 31, Meta had accumulated $182.9 billion in future lease obligations after adding $79 billion during the quarter Askar – stock.adobe.com Oracle was one of the few exceptions to the trend. Its future lease commitments edged lower from the previous quarter.
Even so, the company remains the largest holder of future spending commitments after previously securing many of the large sites needed to support a major contract with OpenAI.
The obligations, which are separate from current leases, typically stay off balance sheets until payments begin. Although they are mainly associated with data centers, they may also cover properties such as office buildings and warehouses. Certain agreements include provisions that can relieve companies of future obligations under specified circumstances.
The Post has sought comment from Amazon, Meta and Microsoft.
Impact of coding artefacts on transport based topological gap detection. Credit: Nature (2026). DOI: 10.1038/s41586-026-10567-8 A critique from the University of St Andrews published in the journal Nature provides evidence that Microsoft's claimed quantum computing "breakthrough" was built on flawed foundations.
The critique, a comment on Microsoft's Nature paper from February 2025, comes after Microsoft's announcement of quantum chips that it claims will allow practical quantum computing within "years not decades." In contrast, the analysis by Dr. Henry Legg, from the St Andrews School of Physics and Astronomy, reveals that Microsoft's claim rested on coding errors and a flawed tuneup protocol and was seemingly contradicted by data not presented by Microsoft.
Dr. Legg said, "Last year Microsoft claimed it had built the equivalent of a precision Swiss watch. However, when I opened the case to examine the mechanism, I found what looked like a chaotic jumble of mismatched parts. Something was making noise, but it didn't look like the breakthrough Microsoft had claimed. Despite the headlines, the vast majority of scientists in the field were skeptical of Microsoft's claim from the start; my critique simply backs up that skepticism in the scientific record."
Quantum computers are predicted to solve complex problems that are impossible for current computers. It is claimed that they can discover new drugs, optimize global logistics and crack encryption. However, quantum states are incredibly fragile, prone to collapsing at the slightest interference from the outside world. To solve this, Microsoft bet heavily on a unique approach called "topological quantum computing." It aims to harness elusive particles called Majoranas to create qubits that are supposed to be immune to outside interference.
However, the existence of Majoranas remains unproven, and Microsoft's pursuit of this technology has faced major credibility issues before. In 2021, researchers funded by the company were forced to retract a previous Nature paper that claimed to have found evidence of Majoranas. The authors of that paper apologized for "insufficient scientific rigor."
The Topological Gap Protocol (TGP) was supposedly Microsoft's answer to these past failures—an automated software test designed to eliminate human bias and prevent false positives. Yet today's peer-reviewed critique provides evidence that this protocol is itself flawed. Legg's analysis reveals severe issues with how Microsoft used the TGP to validate its devices:
Simply shifting measurement windows can alter the protocol's outcome. This causes Microsoft's software to classify the exact same device region as either suitable for quantum computing ("gapped") or not suitable ("gapless") simply because of arbitrary measurement choices. Microsoft presented only the favorable outcomes of the protocol in its Nature publication. Contradictory results, where the TGP classified the purportedly successful regions as not suitable for quantum computing, were not shown. Coding errors in Microsoft's data processing caused it to omit and completely miss exploring other critical regions of the device's phase space, despite the explicit requests of peer reviewers for these checks. The raw conductance data, which Microsoft did not present in its original paper, reveals a highly disordered system. Instead of the pristine topological gap required for quantum computing, the data appears to show signatures of disorder and non-topological "quantum dots" that could explain Microsoft's measurements. This case highlights how rigorous scientific analysis can challenge even the largest technology corporations.
Legg concluded, "I am simply reflecting what most in the field felt from the initial announcement. I felt that I needed to put these concerns into a formal scientific critique. It is good that it has now been peer-reviewed and published."
Publication details Henry Legg, On the robustness of topological gap detection via transport, Nature (2026). DOI: 10.1038/s41586-026-10567-8. www.nature.com/articles/s41586-026-10567-8
Journal information: Nature
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Citation: Critique challenges Microsoft's quantum computing claims (2026, June 24) retrieved 24 June 2026 from https://techxplore.com/news/2026-06-microsoft-quantum.html
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BENSALEM, Pa., June 24, 2026 (GLOBE NEWSWIRE) -- Law Offices of Howard G. Smith reminds investors that class action lawsuits have been filed on behalf of shareholders of the following publicly-traded companies. Investors have until the deadlines listed below to file a lead plaintiff motion.
Investors suffering losses on their investments are encouraged to contact the Law Offices of Howard G. Smith to discuss their legal rights in these class actions at (215) 638-4847 or by email to [email protected].
Erasca, Inc. (NASDAQ: ERAS)
Class Period: January 14, 2025 – April 26, 2026
Lead Plaintiff Deadline: August 10, 2026
The complaint alleges that throughout the Class Period the defendants made false and/or misleading statements and/or failed to disclose that: (1) ERAS-0015’s preclinical data was based on improper comparisons to RevMed and placed Erasca at risk of violating patent and trade secret protections; and (2) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
Nano-X Imaging Ltd. (NASDAQ: NNOX)
Class Period: March 31, 2025 – April 17, 2026
Lead Plaintiff Deadline: August 11, 2026
The complaint alleges that throughout the Class Period the defendants made false and/or misleading statements and/or failed to disclose that: (1) Defendants overstated purported efficiency gains achieved in Nano-X’s operations, as well as the purported increased demand for its products; (2) in reality, Nano-X’s production and manufacturing operations were poorly aligned with demand for the Company’s products; (3) as a result, Nano-X was experiencing significantly increased operating expenses and cash burn; (4) the foregoing significantly increased the likelihood that Nano-X would be forced to take disruptive remedial measures with respect to its manufacturing operations, entailing significant restructuring and impairment charges; and (5) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
Microsoft Corporation (NASDAQ: MSFT)
Class Period: May 1, 2025 – January 28, 2026
Lead Plaintiff Deadline: August 11, 2026
The complaint alleges that throughout the Class Period the defendants made false and/or misleading statements and/or failed to disclose: (1) that Microsoft’s Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; (2) that Microsoft’s flagship proprietary AI model ranked well below competitors on a number of benchmark tests; (3) that Microsoft needed to increase by billions of dollars its capital expenditures and divert GPU and CPU capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related R&D; (4) that, as a result of the foregoing, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and the Company’s Copilot offerings had lost market share to rival products, a trend that was increasing; and (5) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
To be a member of these class actions, you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the class action. If you wish to learn more about these class actions, or if you have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Howard G. Smith, Esquire, of Law Offices of Howard G. Smith, 3070 Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020, by telephone at (215) 638-4847 or by email to [email protected], or visit our website at www.howardsmithlaw.com.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
Contacts
Law Offices of Howard G. Smith
Howard G. Smith, Esquire
215-638-4847
888-638-4847 [email protected]
www.howardsmithlaw.com
NEW YORK, June 24, 2026 (GLOBE NEWSWIRE) -- Bronstein, Gewirtz & Grossman, LLC, a nationally recognized investor-rights law firm, announces that a class action lawsuit has been filed against Microsoft Corporation (NASDAQ: MSFT) and certain of its officers.
This lawsuit seeks to recover damages against Defendants for alleged violations of the federal securities laws on behalf of all persons and entities that purchased or otherwise acquired Microsoft securities between May 1, 2025 and January 28, 2026, both dates inclusive (the “Class Period”). Such investors are encouraged to join this case by visiting the firm’s site: bgandg.com/MSFT.
Microsoft Case Details
The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements because they failed to disclose that:
Microsoft’s Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; Microsoft’s flagship proprietary AI model ranked well below competitors on a number of benchmark tests; Microsoft needed to increase by billions of dollars its capital expenditures and divert graphics processing unit (“GPU”) and central processing unit (“CPU”) capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related research and development (“R&D”); and as a result of the above, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and Microsoft’s Copilot offerings had lost market share to rival products, a trend that was increasing. What's Next for Microsoft Investors?
A class action lawsuit has already been filed. If you wish to review a copy of the Complaint, you can visit the firm’s site: bgandg.com/MSFT. or you may contact Peretz Bronstein, Esq. or his Client Relations Manager, Nathan Miller, of Bronstein, Gewirtz & Grossman, LLC at 917-590-0911. If you suffered a loss in Microsoft you have until August 11, 2026, to request that the Court appoint you as lead plaintiff. Your ability to share in any recovery doesn't require that you serve as lead plaintiff.
No Cost to Microsoft Investors
We, Bronstein, Gewirtz & Grossman LLC, represent investors in class actions on a contingency fee basis. That means we will ask the court to reimburse us for out-of-pocket expenses and attorneys’ fees, usually a percentage of the total recovery, only if we are successful.
Why Bronstein, Gewirtz & Grossman, LLC for Microsoft Securities Class Action?
Bronstein, Gewirtz & Grossman, LLC is a nationally recognized firm that represents investors in securities fraud class actions and shareholder derivative suits. Our firm has recovered hundreds of millions of dollars for investors nationwide. More at www.bgandg.com
"Our practice centers on restoring investor capital and ensuring corporate accountability, which serves to uphold the essential integrity of the marketplace," said Peretz Bronstein, Founding Partner of Bronstein, Gewirtz & Grossman, LLC.
Follow us for updates on LinkedIn, X, Facebook, or Instagram.
Contact Info
Peretz Bronstein, Esq. or Nathan Miller
Bronstein, Gewirtz & Grossman, LLC
917-590-0911 | [email protected]
Attorney advertising.
Prior results do not guarantee similar outcomes.
by Todd Bishop on Jun 23, 2026 at 11:50 amJune 23, 2026 at 11:50 am
Brendan Burns, Microsoft technical fellow and a co-founder of Kubernetes. (Microsoft Photo) Microsoft is promising relief to engineers who get woken up at 3 a.m. for outages and other cloud glitches: an agent informed by its years of experience running Azure, designed to diagnose whatever’s going wrong and recommend potential fixes.
One big benefit over humans: the agent can operate without the stress, fatigue, or tunnel vision that often hampers people doing it on little sleep.
“Agents are a little bit less emotionally attached,” said Brendan Burns, a Microsoft technical fellow and corporate vice president who was one of the creators of Kubernetes. He pointed out that agents don’t feel the pressure when a manager asks for a rapid root-cause analysis.
The Azure Copilot Observability Agent, in preview since late last year, was made generally available Tuesday. It investigates incidents by connecting the logs, metrics, traces and other signals scattered across a company’s systems, then points engineers toward the likely cause.
At this point, the agent does not fix problems on its own. Microsoft also introduced what it calls autonomous operations, in preview, letting the agent triage and investigate alerts without a person prompting it. But it still stops short of acting. It won’t restart a resource or change a configuration, for example, instead leaving it to humans to decide and execute.
Microsoft is joining a crowded field. Datadog made its Bits AI SRE agent generally available in December, and Amazon’s AWS followed with a comparable DevOps Agent this spring. Microsoft said the agent is priced based on usage rather than a flat per-seat license, which is the same model AWS uses for its DevOps Agent.
Established observability players including Dynatrace, Splunk, New Relic and Grafana are moving quickly in the same direction, alongside a wave of AI-focused startups.
In an interview with GeekWire this week, Burns said he believes Microsoft’s breadth is one of its advantages, seeing more of a customer’s software than rivals do, from GitHub to Azure deployments to the signals systems generate. Knowing how those connect, he said, helps the agent trace a problem back to the line of code behind it.
More than a decade ago, Burns and his then-Google colleagues Joe Beda and Craig McLuckie created Kubernetes, the open-source software that lets companies run applications across large, constantly changing infrastructure. It became foundational to cloud computing, and added to the complexity teams now have to manage.
Kubernetes brought a kind of self-repair to that world: when something breaks, it works automatically to restore the system to a healthy state. But it follows fixed rules, Burns said. It’s “very deterministic” — it “can’t make hypotheses, it can’t investigate solutions.”
AI tools like the Azure observability agent are meant to add that missing layer: forming a theory about what went wrong, testing it against the data, and continuing to work to find a solution.
Full autonomy — letting the agent act, not just investigate — is still down the road. In a blog post Tuesday, Burns framed the launch as part of a broader shift toward “agentic operations,” which reason across signals and will someday be able to act on them.
For now, the agent can do a lot of the digging, even if a human still makes the call.
Burns, who recalled once pulling a 36-hour on-call shift, said he can think of “a lot of late nights that would have been a lot nicer if I’d had this 10 years ago.”
Key Takeaways Summer volatility is seasonal, not structural.Technical and historical indicators favor the bulls.Healthy rotations are occurring beneath the market surface. 2026: A Whirlwind on Wall StreetThus far, 2026 has been a whirlwind for Wall Street investors. First, stocks cascaded lower amid the US-Iran conflict in the Middle East. Meanwhile, crude oil prices amid turmoil at the Strait of Hormuz (where roughly 20% of the world’s oil supply traffics). Despite the concerns, Wall Street did what it often does best - climb the proverbial Wall of Worry. By early April, US investors began ignoring the geopolitical headlines and began to refocus on the underlying economy which is being driven the AI buildout.
What Should Investors Be Watching?Summer SeasonalityAfter a relentless rally from early April to late May, stocks have seemingly returned to their volatile ways. Seasonality and simple profit taking may be playing a key role. Often, institutional investors (who manage the majority of capital on Wall Street) take off on vacation during the summer, leading to an illiquid and volatile market environment. Additionally, investors often take chips off the table ahead of the mid-term elections.
Image Source: Carson Investment Research, FactSet
Markets Don’t Top in JuneOn the flip side, the good news for investors is that markets rarely top in June. In fact, over the past 50 years, no S&P 500 bear market has ever begun in June.
QQQ Retreats to the 10-week Moving AverageAfter a raging multi-week rally, the Nasdaq 100 Index ETF (QQQ) finally retreated to the 10-week moving average. Seasoned investors understand that when an index gets extended from a moving average, it tends to snap back to it in a rubber band like fashion. Nevertheless, the first retreat to the 10-week moving average after a correction is historically extremely favorable to bulls.
Image Source: TradingView
Market Participation BroadensSpaceX ((SPCX - Free Report) ), the largest IPO in history, could be causing some short-term liquidity issues for other stocks. Meanwhile, “Mag 7” stocks like Microsoft ((MSFT - Free Report) ) and Alphabet ((GOOGL - Free Report) ) have lagged recently. Nevertheless, the S&P 500 Equal Weight ETF ((RSP - Free Report) ) and the Russell 2000 Index ETF ((IWM - Free Report) ) have outperformed recently, suggesting that the market is in a rotational period, not an all-out selling stage.
Sentiment Remains SourDespite the massive gains in the market, most investors remain skeptical. In fact, the latest AAII Sentiment Survey has more bears than bulls – a bullish contrarian indicator.
Image Source: AAII
Bottom Line
Markets are currently digesting massive first half gains. That said, several market indicators suggest that the volatility and selling will be temporary.
Bragar Eagel & Squire, P.C. Litigation Partners Brandon Walker and Melissa Fortunato Encourage Investors Who Suffered Losses In Microsoft (MSFT) To Contact Them Directly To Discuss Their Options
If you purchased or acquired Microsoft common stock between May 1, 2025 and January 28, 2026 and would like to discuss your legal rights, contact Bragar Eagel & Squire partner Brandon Walker or Melissa Fortunato by email at [email protected] or by telephone at (212) 355-4648
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NEW YORK, June 23, 2026 (GLOBE NEWSWIRE) --
What’s Happening:
Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against Microsoft Corporation (“Microsoft” or the “Company”) (NASDAQ:MSFT) in the United States District Court for the Western District of Washington on behalf of all persons and entities who purchased or otherwise acquired Microsoft common stock between May 1, 2025 and January 28, 2026, both dates inclusive (the “Class Period”). Investors have until August 11, 2026 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Allegation Details:
According to the lawsuit, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) Microsoft's Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; (2) Microsoft's flagship proprietary AI model ranked well below competitors on a number of benchmark tests; (3) Microsoft needed to increase by billions of dollars its capital expenditures and divert graphics processing unit ("GPU") and central processing unit ("CPU") capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related research and development ("R&D"); and (4) as a result, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and Microsoft's Copilot offerings had lost market share to rival products, a trend that was increasing. When the true details entered the market, the lawsuit claims that investors suffered damages.
Next Steps:
If you purchased or otherwise acquired Microsoft shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at [email protected], telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, South Carolina, and California. The firm represents individual and institutional investors in securities, derivative, and commercial litigation as well as individuals in consumer protection and data privacy litigation. The firm has a nationwide practice and routinely handles cases in both federal and state courts. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Follow us for updates on LinkedIn and Facebook, and keep up with other news by following Brandon Walker, Esq. on LinkedIn.
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52-Week Range$356.28▼
$555.45Dividend Yield0.97%
P/E Ratio22.22
Price Target$561.20
Microsoft Corporation NASDAQ: MSFT is down approximately 20% in the last 12 months. Most of the news around the company has been negative.
There have been layoffs, significant ongoing capital expenditures to support its artificial intelligence ambitions, cost pressures in its gaming division, and the ongoing transformation of Microsoft’s relationship with OpenAI.
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That’s created significant noise around the company and takes away from the fact that the company’s business is doing just fine.
Significantly, investors are only paying about 22x earnings to own MSFT. That has some investors crying foul due to the company’s self-reported $80.1 billion in capital expenditures in the nine months ending March 31, 2026.
But there’s more nuance to that story than may appear. And that’s where the boring but beautiful story begins.
Microsoft's AI Spending Is Backed by Strong Cash FlowIt's fair to point out that Microsoft's free cash flow (FCF) is down. Operating cash flow over that nine-month stretch mentioned above was $127.5 billion, which means CapEx alone consumed roughly 63 cents of every dollar of operating cash generated. That's compared to about 51 cents in the prior-year period.
But there’s an equally compelling counterargument that needs to be considered in an honest discussion. That is, Microsoft is funding the buildout primarily through the cash machine it already runs, not by mortgaging the balance sheet.
In fact, long-term debt is actually shrinking. The $80 billion CapEx isn't leverage-fueled speculation; it's a company deploying its own cash to build infrastructure it expects to monetize. That should take investors to the company’s nine-month net income, which hit $98 billion.
The takeaway is that Microsoft’s cash generation engine isn't under stress. Perhaps more importantly, the company’s AI business surpassed an annual revenue run rate of $37 billion in the last quarter. That was up 123% year over year (YOY).
Azure grew 40%, and contracted future revenue was up 99% YOY to $627 billion. That backlog is the story behind infrastructure spending. Management is guiding for roughly $190 billion in capital expenditures for calendar year 2026 and simultaneously reporting demand that continues to outpace capacity.
Microsoft's Dividend Growth Story Is Easy to OverlookBut something else was going on behind the scenes in the last 20 years. In fact, it’s been the last 23 years. That’s the number of consecutive years that Microsoft has increased its dividend payment.
Microsoft Dividend PaymentsDividend Yield0.97%
Annual Dividend$3.64
Dividend Increase Track Record23 Years
Annualized 5-Year Dividend Growth10.24%
Dividend Payout Ratio21.67%
Upcoming Ex-Dividend DateAug. 20
MSFT Dividend History
Many investors will yawn at a yield of just 0.95%. However, the more salient number is the average annual growth rate of over 10% in the last three years. That's resulted in an annual payout per share of $3.64. Both numbers are well supported by a payout ratio of around 18% based on next year’s earnings estimates.
It may not mean much to say that Microsoft will be a Dividend Aristocrat in two years. But the company’s path to that title hasn’t come at the expense of growth. In the last 10 years, MSFT has delivered a total return of over 780%, and obviously, with a dividend yield under 1%, virtually all of those gains have come from stock price appreciation.
What makes the dividend story particularly compelling right now is the timing. Microsoft's next annual dividend increase is likely to be announced alongside its fiscal Q4 earnings report, due in late July. Investors who buy before that announcement lock in a lower cost basis on a growing income stream. That's a straightforward value proposition that tends to get overlooked with investors who are fixated on CapEx.
MSFT's Valuation Looks Increasingly AttractiveMSFT’s 20% decline in 2026 has quietly created one of the more attractive entry points Microsoft has offered in years. At roughly 22x forward earnings, MSFT is trading approximately 24% below its 10-year average price-to-earnings (P/E) ratio of around 31x.
Microsoft Corporation (MSFT) Price Chart for Wednesday, June, 24, 2026
Investors can choose to look at MSFT as a stock in distress. However, a more accurate framing may be to view it as a company being repriced because the market is impatient with infrastructure spending that hasn't yet fully shown up in free cash flow.
Microsoft’s business, however, hasn't missed a beat. Over each of the three most recent quarters, Microsoft posted 18% revenue growth. Operating margins expanded year-over-year in each of those same periods. Net income for the trailing 12 months recently crossed $125 billion.
Are those the numbers of a company in trouble? It doesn’t seem so. They look more like the numbers of a company transitioning from a software giant into a cloud and AI infrastructure platform. That transition is measurably ahead of schedule.
For investors who want exposure to AI without paying the speculative premiums attached to pure-play names, Microsoft is an unusual combination. It's a business growing at 18% annually, returning capital through buybacks and a growing dividend, with a balance sheet that carries more cash than long-term debt and a contracted backlog approaching two-thirds of a trillion dollars.
The noise around the stock may be real—but it’s also masking the opportunity.
Should You Invest $1,000 in Microsoft Right Now?Before you consider Microsoft, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Microsoft wasn't on the list.
While Microsoft currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The AI boom is creating opportunities across semiconductors, cloud computing, enterprise software, infrastructure, cybersecurity, and automation.
Inside this report, you’ll find 10 companies positioned to benefit as artificial intelligence moves from hype to real-world deployment and becomes a core growth driver for corporate America.
Amid the boom in artificial intelligence spending, one key factor has separated Meta Platforms NASDAQ: META from the other Magnificent Seven hyperscalers: cloud computing. Microsoft NASDAQ: MSFT, Amazon.com NASDAQ: AMZN, and Alphabet NASDAQ: GOOGL all have massive cloud computing businesses.
This is a fair market value price provided by Massive. Learn more.
52-Week Range$356.28▼
$555.45Dividend Yield0.97%
P/E Ratio22.22
Price Target$561.20
Strategic pivots rarely happen without a massive catalyst forcing the issue. For Microsoft NASDAQ: MSFT, that catalyst may be buried deep in the razor-thin margins of Microsoft's interactive entertainment division. A recent internal memo from Xbox Chief Executive Officer Asha Sharma revealed Microsoft expects the gaming unit to end fiscal year 2026 with a roughly 3% accountability margin.
When you place that figure next to Microsoft's approximately 39% corporate net margin, the structural drag becomes almost impossible to ignore. Retail investors often look at gross revenue, but institutional capital cares strictly about free cash flow and margin expansion.
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Dragging a highly profitable corporate structure down with a capital-intensive division creates an artificial valuation ceiling. Microsoft built a trillion-dollar empire on high-margin software and cloud architecture. Subsidizing loss-leader gaming consoles actively dilutes the immense profitability of Microsoft's core enterprise services.
The Real Cost of the Hardware WarThe physical hardware business remains notoriously cyclical and incredibly capital-intensive. Producing the physical boxes required to play modern video games demands massive upfront capital expenditures. Manufacturing costs have skyrocketed globally, with NAND memory and other critical component prices surging by up to 700% since the current generation of consoles originally launched.
These escalating physical production costs directly contributed to a severe 33% year-over-year plunge in Xbox hardware revenue during Microsoft's third quarter of fiscal year 2026. Selling hardware at a loss only makes financial sense if you can guarantee a massive, captive audience to buy high-margin software over a 10-year cycle. When the hardware costs outpace the software attach rate, the entire ecosystem begins to fracture.
Player 2: Losing the Install Base BattleUnderstanding the necessity of a structural overhaul requires examining the current state of the global gaming market. The install base deficit between Microsoft and Sony NYSE: SONY has widened to an unsustainable degree.
Sony's PlayStation 5 currently commands an estimated 75 million active units globally. That dominant market share completely dwarfs the 30 million units sold across the Xbox Series X and Series S ecosystem. This hardware gap directly caps the growth potential of Xbox Game Pass, Microsoft's flagship recurring revenue subscription service. Microsoft attempted to bridge the resulting revenue shortfall with an aggressive pricing strategy in October 2025, raising the Game Pass Ultimate tier to $30 per month from its longstanding $19.99 per month price.
Consumers immediately demonstrated heavy subscription elasticity, resulting in millions of active cancellations. Subscription elasticity is a critical metric for software-as-a-service models. When a provider raises prices, they test the absolute pricing power of their ecosystem. Losing millions of users over a simple rate increase proves that Xbox Game Pass lacks the inelastic demand seen in Microsoft's enterprise software subscriptions.
A subsequent price correction to $23 per month in April 2026 stemmed the bleeding, but Microsoft failed to restore the subscription service to previous growth trajectories. You simply cannot maximize the return on a $69 billion investment, which is the exact price Microsoft paid for Activision Blizzard, by restricting popular software to a distant second-place hardware ecosystem.
Maintaining a closed hardware pipeline actively prevents Microsoft from licensing lucrative intellectual property to competitors. Third-party platforms often extract higher margins from Xbox titles than Microsoft realizes directly through physical console sales.
Respawning Xbox as a SubsidiaryChief Executive Officer Satya Nadella recently signaled a willingness to fundamentally change how Xbox operates. Strategic leaks indicate executive leadership may be heavily evaluating transitioning Xbox into a wholly owned, independent subsidiary.
This specific strategy directly mirrors the successful corporate structures of LinkedIn and GitHub. Operating as an independent subsidiary allows a division to maintain a distinct internal culture and operational agility, while simultaneously insulating Microsoft's broader earnings before interest, taxes, depreciation, and amortization (EBITDA) from division-specific volatility.
By operating independently, Xbox could aggressively pivot toward platform-agnostic cloud gaming. Shedding the financial obligation to win a hardware war allows the gaming brand to focus entirely on software distribution and recurring subscription revenue across all interactive devices, including smart televisions, mobile phones, and rival consoles.
Preparation for a leaner future is already underway internally. Microsoft is executing severe cost-reduction measures to eliminate bloated administrative overhead. Development studios, including Compulsion Games, Ninja Theory, and Double Fine, are facing permanent closure or active spin-outs. Trimming these prestige, high-cost, low-return operations provides immediate overhead relief ahead of scheduled Microsoft corporate layoffs in July.
Leveling Up Shareholder ValueMicrosoft’s market sentiment has been turbulent recently, with shares slipping below $400 and the stock’s earnings multiple compressing into the low 20s. Even after that reset, Microsoft still trades like a company expected to deliver consistent, scalable growth. Funneling capital into low-margin gaming hardware threatens that narrative, particularly as investors scrutinize the rising cost of global artificial intelligence infrastructure.
Overall MarketRank™99th Percentile
Analyst RatingModerate Buy
Upside/Downside50.1% Upside
Short Interest LevelHealthy
Dividend StrengthStrong
News Sentiment0.90 Insider TradingSelling Shares
Proj. Earnings Growth15.04%
See Full Analysis
High-profile money managers, including Bill Ackman at Pershing Square, have recently rotated capital out of certain megacap tech holdings, demanding absolute operational efficiency from the leaders of the artificial intelligence race. Microsoft is also facing shareholder lawsuits and increased scrutiny over the capital expenditure demands of the Azure cloud business. In this macroeconomic environment, maintaining a 3% margin is a luxury Microsoft can no longer afford.
Divesting the low-margin hardware infrastructure fundamentally restructures Microsoft's interactive entertainment sector. Removing billions in gaming hardware subsidies from Microsoft's balance sheet immediately improves return on equity and frees up vital capital. Microsoft can then redirect that capital into high-yield cloud computing infrastructure and Microsoft's active $60 billion share repurchase program.
The Final Boss: Executing the Spin-OffA structural shift away from physical hardware distribution introduces a compelling long-term thesis for Microsoft. Isolating the gaming division protects corporate earnings, streamlines internal operations, and positions Microsoft to dominate the software side of the entertainment sector without the heavy anchor of physical manufacturing.
Investors may want to monitor upcoming July restructuring announcements and carefully assess how a formalized subsidiary structure could improve forward earnings guidance before adding Microsoft shares to active portfolios.
Should You Invest $1,000 in Microsoft Right Now?Before you consider Microsoft, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Microsoft wasn't on the list.
While Microsoft currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Looking to profit from the electric vehicle mega-trend? Click the link to see our list of which EV stocks show the most long-term potential.
Microsoft (MSFT - Free Report) closed the most recent trading day at $373.94, moving +1.8% from the previous trading session. This move outpaced the S&P 500's daily loss of 1.44%. Elsewhere, the Dow lost 0.09%, while the tech-heavy Nasdaq lost 2.22%.
Coming into today, shares of the software maker had lost 12.24% in the past month. In that same time, the Computer and Technology sector gained 0.98%, while the S&P 500 gained 0.08%.
The upcoming earnings release of Microsoft will be of great interest to investors. On that day, Microsoft is projected to report earnings of $4.21 per share, which would represent year-over-year growth of 15.34%. Meanwhile, the latest consensus estimate predicts the revenue to be $87.44 billion, indicating a 14.39% increase compared to the same quarter of the previous year.
For the annual period, the Zacks Consensus Estimates anticipate earnings of $17.33 per share and a revenue of $329.26 billion, signifying shifts of +27.05% and +16.87%, respectively, from the last year.
Investors should also pay attention to any latest changes in analyst estimates for Microsoft. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.
Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0% decrease. At present, Microsoft boasts a Zacks Rank of #3 (Hold).
In terms of valuation, Microsoft is currently trading at a Forward P/E ratio of 21.2. This denotes a premium relative to the industry average Forward P/E of 14.35.
We can also see that MSFT currently has a PEG ratio of 1.28. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The average PEG ratio for the Computer - Software industry stood at 1.28 at the close of the market yesterday.
The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 104, which puts it in the top 43% of all 250+ industries.
The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.
Finding stocks to buy and hold over the next decade is no easy task. If you rewind to mid-2016, could you have predicted all of the various notable events that occurred over the next few years: COVID-19, the rise of generative AI, presidential election results, or wars? I doubt it.
However, a few somewhat predictable items have panned out. One of those is cloud computing, which was just starting to pick up momentum in 2016 and turned out to be a great business over the next decade. I think there are a ton of signs that cloud computing will remain a strong business over the next decade-plus, driven by AI workloads that come online.
Two of my favorite stocks in this industry are Alphabet (GOOG +0.74%) (GOOGL +0.95%) and Microsoft (MSFT 0.21%). Both of these are major cloud computing providers, and I think that each makes for a solid investment right now.
Image source: Getty Images.
Alphabet Alphabet's cloud computing wing is known as Google Cloud. Google Cloud was the last of the major three cloud platforms to start up, but it has quickly risen to become a notable force among the three, the other being Amazon's (AMZN +1.55%) Amazon Web Services (AWS).
Google Cloud's revenue growth rate is by far the fastest. In the first quarter, its revenue rose by a jaw-dropping 63% year over year, adding nearly $8 billion in new business over the past 12 months. It also did a tremendous job expanding its operating margin from 18% to 33%.
All of this is occurring because Google Cloud has become a top place to run AI workloads. Alphabet has a strong generative AI offering, Gemini, native to Google Cloud. Gemini is a strong competitor in the AI arena and offers some of the highest-performing yet lowest-cost models in the market. The vast majority of AI applications are likely suited to this lower cost offering, making Google Cloud a top place to build AI applications.
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Furthermore, Google Cloud has a secret weapon: The Tensor Processing Unit (TPU). The TPU is a custom-designed AI chip that can offer superior cost-performance compared to GPU-based training and is another reason Google Cloud is so rapidly growing. In fact, the TPU is so effective that Alphabet is going to start selling TPUs to external clients as another revenue stream.
Alphabet is the fastest-growing cloud titan in the space and has a strong AI offering that's assisting it. I think it's a great buy now, as these AI workloads will need to run on Google Cloud's servers forever, leading to a great subscription-like model.
Microsoft Microsoft doesn't provide investors with as much information regarding Azure as Alphabet does with Google Cloud. Instead, it provides investors only with its growth rate, which was 40% year over year in its latest quarter. That's still an impressive growth rate, and what's driving that is Microsoft's neutral state.
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Unlike Alphabet, which would prefer its users to use its Gemini family, Microsoft is staying agnostic. Countless large language models can be accessed on Azure, making it a great place to go if you're not sure which AI model you want driving your application. But Microsoft also owns 27% of OpenAI, the makers of ChatGPT, so it also has a vested interest in having its clients choose ChatGPT.
Microsoft has also integrated ChatGPT across its various business productivity software via Copilot, which is part of an AI business unit with annual revenue of $37 billion, growing at a 123% clip.
Perhaps the most compelling part about Microsoft's stock is its stock price: It's down 30% from its highs. Considering the strength of Microsoft's core business and the longevity of the new cloud workloads coming online, I think this is a bargain, and investors should scoop up Microsoft stock alongside Alphabet's to form a great investment group that should crush the market over the next decade.
Join the YouTube Livestream July 10 12:00pm EST to see players compete around the world on the ultimate ASUS set-up June 24, 2026 04:00 ET | Source: ASUS Computer International
Fremont, CA, June 24, 2026 (GLOBE NEWSWIRE) -- ASUS and the Microsoft Excel World Championships (MEWC) today announced the Landmark Battle, a special Excel Esports event that combines high-pressure spreadsheet competition with challenges inspired by notable global landmarks. The livestream will take place Friday, July 10, 12:00pm EST on the Excel Esports YouTube channel and will showcase how ASUS ExpertBook Ultra laptops and ASUS ZenScreen OLED portable monitors enable flexible, high-performance workflows in demanding real-world environment that empowers professionals to stay productive anytime, anywhere.
ASUS Partners with Microsoft Excel World Championships
“Excel Esports is a perfect example of how today's professionals are redefining what performance looks like," said Shawn Chang, General Manager of ASUS North America. "What started as an everyday workplace skill has become a global competitive phenomenon, and we're proud to equip these athletes with the hardware they need to compete at the highest level, wherever in the world that takes them.”
“Our players push Excel to its absolute limits, demanding the same level of speed, precision, and reliability from their hardware as top-tier athletes do from their gear,” says Andrew Grigolyunovich, Founder of the Financial Modeling World Cup and the Microsoft Excel World Championship. “The Landmark Battle takes that vision one step further. With ASUS equipping our players with the hardware to compete from anywhere in the world, we are proving that this sport truly has no limits, geographical or otherwise.”
A global Excel Esports showdown inspired by iconic landmarks
Unlike traditional tournaments, this Landmark Battle event takes Excel Esports outdoors at iconic sights including the Statue of Liberty, Eiffel Tower, Big Ben and the Sydney Opera House. Four elite competitors will be challenged to solve complex data problems in unpredictable weather circumstances.
To conquer the elements, competitors will rely on the ultimate mobile setup from ASUS, the world's No.1 OLED brand. They will play on the ASUS ExpertBook Ultra, the premium thin and light laptop that has redefined business mobility with its ultralight 2.18lb design, up to 26 hours of battery life, and powerful AI-ready performance. Equipped with up to an Intel® Core™ Ultra X9 Series 3 processor, an anti-glare 14-inch 3K tandem OLED display with 1400-nits HDR brightness, a responsive haptic touchpad, and an advanced coated keyboard, ExpertBook Ultra enables seamless multitasking and exceptional productivity anywhere, with premium comfort.
To provide even more screen space for the event, each ExpertBook Ultra will be paired with ASUS ZenScreen OLED MQ16FC, a lightweight 16-inch portable monitor that maximizes multitasking with a productivity-boosting 16:10 aspect ratio. A single USB-C is all that’s needed to extend or duplicate the laptop screen. USB-C handles both power and video signal transmission, so it’s simply a matter of plug-and-play when it’s time to increase work efficiency. With the power pass-through feature, the ZenScreen OLED MQ16FC can be powered by the laptop, or deliver power to the laptop for added power redundancy during a critical event.
With ultra-portable designs and anti-glare technology, this powerhouse combination proves that ASUS hardware delivers peak performance far beyond the conventional office.
The competitors
Led by Excel Esports legends Andrew Ngai and Diarmuid Early, the Landmark Battle event brings together top spreadsheet champions, rising challengers, and strategic dark horses in one of the most unpredictable Excel competitions to date.
Andrew Ngai (Australia), The Precision Challenger: A three-time world champion, Andrew is renowned for structured analytical thinking and exceptional spreadsheet precision and is one of the most recognizable names in Excel Esports. His disciplined approach makes him a formidable contender.
Diarmuid Early (Ireland), The Speed Specialist: Known for lightning-fast execution and aggressive spreadsheet strategies, Diarmuid enters the Landmark Battle event as the reigning Microsoft Excel World Champion and freshly crowned the European Open champion. He is widely regarded as one of the most dangerous high-pressure competitors in Excel Esports.
Nicolas Micot (France), The Adaptive Strategist: Nicolas has been one of the most consistent players in Excel Esports and is earning recognition for strong recent online performances. Given the unpredictable outdoor setting of the Landmark Battle event, his adaptability could become his biggest advantage.
Jaq Kennedy (United Kingdom), The Calm-Under-Pressure Competitor: Jaq is known for composure and consistency during intense Excel Esports matchups. In a format where changing environments, rapid decisions, and strategic pivots determine victory, Jaq’s resilience may prove decisive.
Redefining productivity through competition
The ASUS and MEWC partnership highlight how modern professional skills can be unleashed on-the-go through this ultimate pro setup. Don't miss the outdoor action! Catch the Landmark Battle livestream on July 10, 12:00pm EST on the Excel Esports YouTube channel for exclusive product giveaways and limited-time promotional offers.
Availability & Pricing
The ASUS ExpertBook Ultra (B9406CAA-XSP76T), featuring the Intel® Core™ Ultra X7 Series 3 processor, priced at $3599.99, is available for purchase online at the ASUS Store. Additional configurations of the ExpertBook Ultra with the Intel® Core™ Ultra X9 Series 3 processor will be available in Q3, 2026. For more information, please visit https://us.asus.click/ExpertBookUltra or contact your local ASUS representative.
The ASUS ZenScreen OLED MQ16FC, featuring a 16-inch 16:10 WUXGA OLED panel with 95% DCI-P3 color gamut and Power Pass-Through, priced at $279.00, is available for purchase online at the ASUS Store. For more information, please visit https://www.asus.com/us/displays-desktops/monitors/zenscreen/zenscreen-oled-mq16fc/ or contact your local ASUS representative.
ASUS is a global technology leader that provides the world’s most innovative and intuitive devices, components, and solutions to deliver incredible experiences that enhance the lives of people everywhere. With its team of 5,000 in-house R&D experts, the company is world-renowned for continuously reimagining today’s technologies. Consistently ranked as one of Fortune’s World’s Most Admired Companies, ASUS is also committed to sustaining an incredible future. The goal is to create a net zero enterprise that helps drive the shift towards a circular economy, with a responsible supply chain creating shared value for every one of us.
FORTUNE and FORTUNE World’s Most Admired Companies are registered trademarks of FORTUNE Media IP Limited and are used under license
About Excel Esports and MEWC
The Microsoft Excel World Championship (MEWC) is the world's premier competitive Excel Esports tournament - turning a common office tool into a global sport. Participants solve unique, logic-based challenges using only Microsoft Excel. Now in its third consecutive year at the HyperX Arena in Las Vegas, the MEWC Finals are broadcast on ESPN, reaching an audience of millions. Excel Esports reaches beyond the MEWC stage, running local competitions in 20 different countries with plans to expand. The goal is to make Excel Esports accessible and celebrated worldwide.
[M(1]Included single USB-C talking point and power pass through.
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NEW YORK, June 24, 2026 (GLOBE NEWSWIRE) -- Leading securities law firm Bleichmar Fonti & Auld LLP announces that a class action lawsuit has been filed against Microsoft Corporation (NASDAQ:MSFT) and certain of the Company’s senior executives for securities fraud after its significant stock drop resulting from potential violations of the federal securities laws.
If you invested in Microsoft, you are encouraged to obtain additional information by visiting: https://www.bfalaw.com/cases/microsoft-class-action-lawsuit.
Key Details of the Microsoft ($MSFT) Class Action:
Lead Plaintiff Deadline: August 11, 2026Alleged Misconduct: Securities fraud alleging that Microsoft misled investors regarding its Azure cloud computing platform and AI chatbot CopilotStock Drop: January 28, 2026 – 10% Stock DropCourt: U.S. District Court for the Western District of WashingtonAction: Contact BFA Law to discuss your rights
Investors have until August 11, 2026 to ask the Court to be appointed to lead the case. The complaint asserts securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of investors in Microsoft common stock. The class action is pending in the U.S. District Court for the Western District of Washington. It is captioned City of St. Clair Shores Police and Fire Retirement System, et al., No. 26-cv-02071.
Why is Microsoft Being Sued for Securities Fraud?
Microsoft is a multinational technology company that develops software, cloud services, and devices. In recent years, Microsoft’s cloud computing platform named Azure has been Microsoft’s main growth driver. A key reason for Azure’s recent growth is Microsoft’s multi-billion-dollar investment into AI, including the development of its own generative AI chatbot named Copilot.
According to the complaint, during the relevant period, Microsoft consistently touted Copilot’s best-in-class capabilities, which purportedly drove widespread and growing user adoption. Copilot’s apparent success allowed Microsoft to report surging Azure-related revenue.
As alleged, in truth, Copilot suffered from severe functionality issues that caused user adoption to decline and put Microsoft’s Azure revenue at risk.
Why did Microsoft’s Stock Drop?
On January 28, 2026, Microsoft announced disappointing 2Q 2026 financial results and that Azure growth had slowed suddenly. Microsoft also allegedly revealed for the first time that the number of Microsoft 365 Copilot premium customers totaled only 15 million, materially below analyst estimates.
This news caused the price of Microsoft common stock to decline $48.13 per share, or 10%, from $481.63 per share on January 28, 2026, to $433.50 per share on January 29, 2026.
Additionally, on February 3, 2026, The Wall Street Journal reported in an article titled “Microsoft’s Pivotal AI Product Is Running Into Big Problems” that severe challenges and functionality issues had plagued Copilot, causing the application to lose market share. Specifically, The Wall Street Journal reported that “[c]onfusing brand positioning and interoperability problems have frustrated users.”
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1999 was a bad year for Berkshire Hathaway (BRKA +0.68%) (BRKB +0.66%). Its book value per share increased by a measly half a percentage point. Its stock price tanked 20%. Meanwhile, the dot-com-fueled S&P 500 climbed 21%. It was the worst relative performance in any given year that Warren Buffett managed the company.
While Buffett took the blame for Berkshire's significant underperformance, he also expressed confidence that his company would "modestly exceed" the benchmark index over the next decade. Buffett might have been too modest. Over the next decade, from the date Buffett published his 1999 letter to shareholders (March 3, 2000), Berkshire Hathaway stock returned 176%. The S&P 500 total return during that period was -4.8%.
BRK.A Total Return Level data by YCharts.
Today, Bill Ackman, a billionaire investor who has long looked up to Buffett, has likened a group of stocks to buying Berkshire Hathaway in 2000. While the S&P 500 is consistently pushing toward new highs, these stocks seem to be left behind by the market. Investors can buy them now at an incredible value and benefit for years to come.
Buy these "old-fashioned" companies The biggest trend in the stock market over the last few years has been artificial intelligence (AI). And more recently, even more capital has flowed into very specific sectors related to the AI trade.
Semiconductor stocks have climbed higher as demand for graphics processing units (GPUs) and other AI accelerators continues to grow; the need for networking chips has come into focus; and memory chipmakers face a massive supply crunch. Energy stocks have also benefited as giant data centers consume gigawatts of power. Semiconductor stocks are up more than 90% this year alone, and energy stocks are up close to 60% as of this writing. For reference, the S&P 500 is up just 9% so far this year.
Meanwhile, the market has left the buyers of those products behind. Amazon (AMZN +1.55%), Meta Platforms (META 0.18%), and Microsoft (MSFT 0.21%) have fallen out of favor with investors, and Ackman believes that's a mistake.
"People got excited about internet stocks and Berkshire Hathaway traded at the lowest valuation I think it ever traded at in its history," Ackman said at a recent conference. "I think a similar thing is happening today in a sense to Amazon, and Meta, Microsoft. These are old-fashioned companies in kind of this OpenAI era."
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Indeed, Amazon and Microsoft operate the two largest public cloud platforms in the world. Their revenue is soaring as demand for AI compute grows, and they're investing as much as they reasonably can to meet demand. They're also using significant compute capacity for their own AI development, which fuels other parts of their businesses and drives revenue and operating profits.
Meta may have more to gain from advances in AI than any company. Its advertising business is already seeing strong performance from algorithm improvements across Facebook and Instagram. Ad revenue accelerated sharply in the first quarter. AI chatbots have the potential to turn WhatsApp into a sales and customer service hub for small businesses. And AI-assisted content creation could help serve more personalized images, videos, and advertisements to its 3.5 billion users.
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Nonetheless, investors have concerns about their spending. Ackman takes the opposite stance. "When a business you own, managed by a management team you trust, announces a large increase in capital spending due to increased demand for its products or services, you should be applauding rather than booing." Microsoft, Amazon, and Meta's accelerating revenue growth is a strong indication that they're making the smart decision with their spending plans.
One thing that allowed Berkshire Hathaway to dramatically outperform the S&P 500 in the 2000s was its starting valuation. The stock fell below 1.1 times book value in March of 2000. That's the price Buffett would buy back shares of Berkshire Hathaway before the board changed its share-repurchase policy in 2018. In effect, it was a floor for the stock's valuation. By 2010, the price-to-book ratio had expanded to nearly 1.5, and its book value had climbed quite substantially as well.
Today, Amazon, Microsoft, and Meta trade for price-to-earnings (P/E) ratios they've rarely seen before: 28, 22.5, and 18 times forward earnings expectations, respectively. That's despite all three companies exhibiting strong revenue growth. While their massive capital expenditures will weigh on operating margin in the near term, they still have durable competitive advantages across their businesses, which should ensure long-term earnings power.
It wouldn't be a surprise to see these stocks' performances "modestly exceed" the market average over the next decade as earnings grow and the market rewards them with price-multiple expansion.
