A view shows a Microsoft logo at Microsoft offices in Issy-les-Moulineaux near Paris, France, March 25, 2024. REUTERS/Gonzalo Fuentes/File Photo Purchase Licensing Rights, opens new tab
July 6 (Reuters) - Microsoft (MSFT.O), opens new tab is cutting about 2.1% of its workforce, or roughly 4,800 jobs, the latest in a wave of tech layoffs as the Windows maker spends heavily on AI infrastructure and uses the technology to improve efficiency across its business.
Big Tech's historic AI outlays, set to top $700 billion this year, are piling pressure on companies to show returns from the technology and offset the rising cost of rolling it out across their businesses. Amazon (AMZN.O), opens new tab and Meta Platforms (META.O), opens new tab have also laid off thousands of employees this year.
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Microsoft announced the cuts on Monday following a rough stretch, with its shares falling nearly 23% in the first six months of 2026, their worst first-half performance since 2022.
The software giant earlier this year offered voluntary buyouts to about 7% of its U.S. workforce, or about 9,000 employees. Microsoft often trims jobs near the end of its fiscal year in June as it sets spending plans for the new year.
Booming AI demand has powered growth at Microsoft's Azure cloud-computing business, which was the exclusive seller of OpenAI's models until April, but the mounting cost of building data centers to run those services is squeezing its cash flows.
The company, expected to report results later this month, had in April forecast quarterly Azure sales above Wall Street estimates, but also issued a $190 billion spending projection for 2026 that massively surpassed expectations.
AI tools that can increasingly automate routine business tasks have also emerged as a threat to its lucrative software business, while a surge in memory chip prices driven by data center demand has forced Microsoft to raise Xbox console prices at a time when demand for the console was already soft.
The gaming division's new head, Asha Sharma, said last month the business needed a "reset" and that its profit margin had declined to 3%, forcing a restructuring that could include potential M&A.
"Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform and hardware subsidy, but our annual revenue has declined nearly half a billion during that time," she said in an outspoken memo to employees published on Microsoft's website. "Going forward, this cannot continue."
The company is considering options for the Xbox gaming unit, including a potential spinoff or restructuring as a wholly owned subsidiary, the Information reported last month.
Reporting by Aditya Soni in Bengaluru; Editing by Tasim Zahid and Leroy Leo
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NEW YORK, July 06, 2026 (GLOBE NEWSWIRE) -- Levi & Korsinsky, LLP notifies investors in Microsoft Corporation (NASDAQ: MSFT) that four senior executives are named as individual defendants in a securities class action alleging they personally controlled the false and misleading statements that inflated MSFT shares above $550 during the Class Period. Find out if you qualify to recover losses. You may also contact Joseph E. Levi, Esq. at [email protected] or (212) 363-7500.
The lawsuit, filed in the United States District Court for the Western District of Washington, covers purchasers of Microsoft securities between May 1, 2025 and January 28, 2026. The complaint asserts claims under Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, naming the Company and four officers who allegedly directed, approved, or ratified materially misleading public statements about Microsoft's AI initiatives and Copilot product family. Investors have until August 11, 2026 to seek lead plaintiff status.
The Named Individual Defendants
The action identifies the following officers as controlling persons:
Satya Nadella, CEO and Chairman of the Board, who allegedly proclaimed Copilot offered "best-in-class" capabilities and touted Azure AI infrastructure as "obviously at scale" while concealing significant operational deficienciesAmy E. Hood, CFO and Executive Vice President, who co-signed SEC filings attesting to accuracy and completeness while allegedly omitting material adverse facts about Copilot adoption and AI return on investmentJared Spataro, Chief Marketing Officer, AI at Work, who allegedly told investors "70% of the Fortune 500 are using Copilot in a pretty extensive way" without disclosing brand positioning and interoperability failures. This figure later increased to an alleged 90%.Rajesh Jha, Executive Vice President, Experiences and Devices, who allegedly claimed the competitive "gap is very significant and growing" in Copilot's favor while aware of data siloing and user experience problems. Jha announced his retirement in March 2026 after more than 35 years Sarbanes-Oxley Certification Obligations
The complaint charges that Nadella and Hood signed quarterly and annual reports on Forms 10-Q and 10-K filed with the SEC, personally certifying under Sections 302 and 906 of the Sarbanes-Oxley Act that those filings were accurate and materially complete. The pleading asserts these certifications were false because the filings failed to disclose that Copilot suffered from significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems.
Section 20(a) Control Person Framework
Section 20(a) of the 1934 Act imposes liability on individuals who "controlled" a company that violated federal securities laws. The complaint alleges each Individual Defendant was directly involved in management and day-to-day operations at the highest levels, was privy to confidential information, and participated in drafting, reviewing, or disseminating the alleged misstatements. Each defendant allegedly had the ability to prevent issuance of the false statements or cause them to be corrected.
"Corporate officers have a duty to ensure their companies' public statements are accurate and complete. When officers sign SEC certifications and make representations at investor conferences, they bear personal responsibility for the truthfulness of those disclosures." -- Joseph E. Levi, Esq.
Scienter Allegations
The action contends that each defendant knew or recklessly disregarded that Microsoft's public statements painted a misleading picture of Copilot's success and AI investment returns. The complaint points to the defendants' senior positions, their direct involvement in AI strategy, their access to internal data on Copilot adoption and performance, and their participation in earnings calls and investor conferences where the alleged misrepresentations were made.
Submit your information to join the recovery or call Joseph E. Levi, Esq. at (212) 363-7500.
ABOUT LEVI & KORSINSKY, LLP -- Over the past 20 years, Levi & Korsinsky has secured hundreds of millions of dollars for aggrieved shareholders. The firm has extensive expertise in complex securities litigation and a team of over 70 employees. For seven consecutive years, Levi & Korsinsky has ranked in ISS Securities Class Action Services' Top 50 Report.
Frequently Asked Questions About the MSFT Lawsuit
Q: Who are the defendants named in the MSFT lawsuit? A: The complaint names Microsoft Corporation and individual defendants including CEO Satya Nadella, CFO Amy E. Hood, CMO AI at Work Jared Spataro, and EVP Experiences and Devices Rajesh Jha, all of whom signed SEC filings, made public statements, or certified financial disclosures under Sarbanes-Oxley.
Q: What is a lead plaintiff and why does it matter? A: A lead plaintiff is the investor appointed by the court to represent the entire class. Lead plaintiffs are typically investors with the largest documented losses. Being appointed does not increase individual recovery but gives direct oversight of how the case is run.
Q: What is the MSFT lead plaintiff deadline? A: The deadline to apply for lead plaintiff appointment is August 11, 2026. This deadline applies only to investors seeking to serve as lead plaintiff. Class members who do not apply may still participate in any recovery without taking action before this date.
Q: What does it cost me to participate? A: Nothing. Securities class actions are handled on a pure contingency basis. No upfront fees, no retainer, no out-of-pocket costs.
Q: Who is eligible to join the MSFT investor lawsuit? A: Investors who purchased MSFT stock or securities between May 1, 2025 and January 28, 2026 and suffered financial losses may be eligible. Eligibility is based on purchase date and documented losses, not on whether you still hold the shares.
Q: What if I already sold my MSFT shares -- can I still recover losses? A: Yes. Eligibility is based on when you purchased, not whether you still hold them. Investors who bought during the class period and sold at a loss may still participate.
Q: How do I know if I lost enough money to be the lead plaintiff? A: There is no minimum loss threshold. Courts appoint the investor with the largest provable loss who is willing and able to represent the class adequately. Contact Levi & Korsinsky before August 11, 2026 to evaluate.
CANADA - 2026/07/01: In this photo illustration, the Microsoft logo is seen displayed on a smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
This article was written by Doug Nathman, with research by his team at Trefis.
Microsoft (MSFT) shares have faced challenges, experiencing a 20% decline over the past year and significantly lagging behind the market. The discussion is primarily centered around one substantial figure: a strategy to allocate approximately $190 billion toward capital expenditures in the calendar year 2026. Skeptics question whether the appetite for artificial intelligence is robust enough to justify this investment.
However, another, more revealing statistic receives far less focus. It serves as a counterpoint to the stock's performance.
This figure is Microsoft’s Commercial Remaining Performance Obligation, or RPO. In simpler terms, it reflects the company’s backlog of contracted future revenue derived from signed agreements. It currently amounts to $627 billion.
How Valid Is This Anticipated Revenue?A significant number is one aspect; gaining momentum is another. This backlog is not just a stagnant accumulation of outdated contracts. The company's commercial RPO has increased by 26% year-over-year, even when factoring out the substantial commitments from its associate OpenAI. This illustrates widespread demand throughout the business.
Even more indicative for the near future is the speed at which new business is being secured. The segment of the backlog expected to be recognized as revenue within the following 12 months has risen by 39% year-over-year. This offers a distinct perspective on the company’s growth trajectory, suggesting that clients are entering into new, high-value agreements.
How This Backlog Mitigates Risks Associated With The AI Spending SurgeThe apprehension regarding Microsoft’s expenditure arises from a perceived disconnect between investment and returns. Nevertheless, the RPO figure addresses this disparity. It signifies legally binding commitments from clients to pay for services in the future.
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This capital expenditure is not being utilized based on mere speculation; it is being invested to develop the capacity necessary to accommodate demand that, to a great extent, has already been secured. This backlog serves as proof that the enterprise is investing to meet a contracted reality, progressing beyond a mere forecast. To gain further insight into how the company generates value through its platform, it is essential to comprehend its business model.
For investors monitoring Microsoft, the key earnings will always be significant. However, a clear indication of whether the company’s substantial investment is being met with demand lies in its RPO. As long as this backlog of anticipated business continues to expand, it implies that the company’s situation is more favorable than what the recent stock price suggests.
And if your aim is broad exposure to technology rather than just this single entity, a technology ETF like VGT encompasses that entire sector.
A Strong Signal Doesn't Justify Bet the Farm
A buy signal this evident merits action — but not with more of your net worth than you can afford to potentially see diminish by half. Strong conviction can lead single positions to quietly grow too large, and one unforeseen negative can inflict lasting harm, while selling to rebalance can provide a portion to the IRS. There exists a means to safeguard the position and diversify in a tax-efficient manner.
Index Dow Jones -0,1 % na 52848,66 b. S&P 500 +0,44 % na 7516,13 b. Nasdaq Composite +0,91 % na 26067,65 b.
Obchodní den po prodlouženém víkendu začíná smíšeně. Index Dow Jones kosmeticky ztrácí, povedlo se mu ale po otevření poprvé překonat 53000 b. Tahounem indexu s růstem nad 2 % je Caterpillar (2,55 %) a Goldmman Sachs Group (2,41 %).
Z indexu S&P 500 posilují zejména informační technologie, kterých růst se propisuje i do indexu Nasdaq. Nejslabším sektorem je zdravotnictví. Pfizer ztrácí 2,06 %, Eli Lilly odepisuje 1,16 % a Johnson & Johnson klesá o 1,81 %.
Z technologií dnes opět rostou čipové společnosti. Broadcom a AMD posilují o víc, než 6 %, Nvidia se obchoduje na kladné nule.
Microsoft (-1,65 %) se chystá na další vlnu propouštění, která tentokrát zasáhne divize prodeje a Xbox. Celkem se má společnost zeštíhlit o přibližně 2 % pracovní síly, tedy 4 800 míst. Společnost se snaží o zefektivnění nákladů a tlačí na zvyšování efektivity všech divizí. Microsoft zvažuje i změnu struktury herní divize s možným prodejem několika studií.
OPEC o víkendu oznámil záměr zvýšit těžbu černého zlata. V srpnu by se měl objem navýšit o 188 tis barelů denně. Futures kontrakty na WTI reagují mírným poklesem. Aktuálně se barel obchoduje pod USD 69.
Index S&P 500 +0,44 % na 7516,13 b. Nejsilnější sektory S&P Změna Nejslabší sektory S&P Změna Informační technologie +1,6 % Zdravotní péče -1,8 % Průmysl +1,2 % Nezbytná spotřeba -0,8 % Finanční sektor +0,2 % Reality -0,6 % Nejsilnější akcie S&P Změna Nejslabší akcie S&P Změna Western Digital Corp (WDC) +9,0 % O'Reilly Automotive (ORLY) -5,2 % Advanced Micro Devices (AMD) +7,5 % AutoZone (AZO) -4,7 % Vertiv Holdings (VRT) +7,4 % Constellation Brands (STZ) -3,8 % Teradyne (TER) +7,1 % SBA Communications Corp (SBAC) -3,7 % GE Vernova (GEV) +6,5 % Genuine Parts (GPC) -3,6 %
Marek Kameništiak
Fio banka, a.s.
Prohlášení
Microsoft (MSFT +1.69%), Amazon (AMZN +0.55%), and Alphabet (GOOG 0.37%) (GOOGL 0.23%) still have the two ingredients that can deliver solid returns for long-term investors: AI leadership and massive consumer reach. This provides them with multiple ways to grow revenue and compound earnings.
The S&P 500 has historically averaged about 10% annual earnings growth, according to FactSet. Here's why these "Magnificent Seven" companies can grow earnings faster than that, potentially leading to market-beating returns for shareholders.
Image source: Getty Images.
Microsoft Shares of Microsoft have fallen 23% year to date as investors debate what agentic AI means for the future of enterprise software. Some investors fear that Microsoft's enterprise software could be replaced by enterprises creating their own software tools with agentic AI, but this perspective might overlook one important advantage for Microsoft.
Microsoft's latest quarterly numbers show strengthening demand across its core services. Microsoft Cloud revenue, which includes Office subscriptions and enterprise cloud services, jumped 29% to nearly $55 billion. These numbers still show Microsoft positioned as the default productivity software provider for millions of people and businesses.
A key advantage for Microsoft is its deep enterprise relationships. Microsoft Copilot is grounded in a rich data pool from Work IQ, which has over 17 exabytes of data and is growing 35% year over year. This data spans billions of emails, chats, Team meetings, and documents. This means Copilot provides better answers as adoption grows. After another quarter of strong growth, Microsoft 365 Copilot now has over 20 million paid seats (or licensed users).
That explains why analysts still project long-term earnings growth of roughly 15% annually. With the stock trading around a conservative 22 times forward earnings, Microsoft has a reasonable path to at least double over the next five years and potentially outperform the broader market.
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Amazon Amazon is the cloud computing leader, and Amazon Web Services (AWS) continues to benefit from the AI spending cycle. AWS revenue surged 28% year over year in the first quarter, the fastest pace in 15 quarters.
What makes Amazon unique is its multiple revenue engines, including cloud business, advertising, and a massive e-commerce and shipping network. It can use shopping data to power its $70 billion in trailing-12-month advertising revenue, and use AI capabilities from its investments in data centers and chips to build shopping assistants like Rufus. It all synergizes together into a durable competitive moat.
Importantly, more of Amazon's business has shifted to high-margin services in recent years. Cloud consumption revenue, third-party fulfillment fees, advertising services, and subscriptions give Amazon several profitable growth engines that can expand earnings even if retail sales growth moderates.
For these reasons, analysts still expect Amazon's earnings to grow at an annualized rate of about 21% over the next several years. That high growth, combined with a reasonable forward earnings multiple of 27, could drive market-beating returns.
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Alphabet (Google) Billions of users across Search, YouTube, and other services fuel Alphabet's advertising and subscription revenue. However, its fast-growing cloud computing segment is showing why this is one of the best AI stocks to buy for the long term.
The company's revenue surged 22% year over year in the first quarter, reaching nearly $110 billion. Google Cloud is still a smaller contributor relative to Alphabet's total, but it's scaling quickly, with segment revenue up 63% year over year. This reflects trends similar to those in AWS, with enterprises scrambling to use AI tools to build custom applications and analyze their data more intelligently in the cloud.
Investments in training its Gemini AI model have led to more capable enterprise tools and consumer services, such as AI features built into Google Search. More helpful services pave the way for higher revenue potential.
Alphabet recently announced an $80 billion equity offering to fund its AI compute build-out, including a $10 billion investment from Warren Buffett's Berkshire Hathaway. This is a meaningful signal of the long-term growth opportunity as a leading AI distributor for consumers and enterprises.
The stock is trading at a reasonable forward earnings multiple of 25, with analysts projecting 15% annualized earnings growth in the coming years. This is roughly in line with Microsoft and Amazon, setting up excellent prospects for outperformance relative to the broader market.
NEW YORK, July 06, 2026 (GLOBE NEWSWIRE) -- Leading securities law firm Bleichmar Fonti & Auld LLP announces that a class action lawsuit has been filed against Microsoft Corporation (NASDAQ:MSFT) and certain of the Company’s senior executives for securities fraud after its significant stock drop resulting from potential violations of the federal securities laws.
If you invested in Microsoft, you are encouraged to obtain additional information by visiting: https://www.bfalaw.com/cases/microsoft-class-action-lawsuit.
Key Details of the Microsoft ($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.”
Click here for more information: https://www.bfalaw.com/cases/microsoft-class-action-lawsuit.
What Can You Do?
If you invested in Microsoft, you may have legal options and are encouraged to submit your information to the firm.
All representation is on a contingency fee basis; there is no cost to you. Shareholders are not responsible for any court costs or expenses of litigation. The firm will seek court approval for any potential fees and expenses.
BFA is a leading international law firm representing plaintiffs in securities class actions and shareholder litigation. It has been named a top plaintiff law firm by Chambers USA, The Legal 500, and ISS SCAS, and its attorneys have been named “Elite Trial Lawyers” by the National Law Journal, “Litigation Stars” by Benchmark Litigation, among the top “500 Leading Plaintiff Financial Lawyers” by Lawdragon, “Titans of the Plaintiffs’ Bar” by Law360 and “SuperLawyers” by Thomson Reuters.
Most recently, The Legal 500 awarded BFA the most client satisfaction accolades of any plaintiff’s securities litigation law firm, with clients noting: “[t]here is no better service provider in the practice area,” “[t]he interest of the client is always front and center,” and “[t]here isn’t a better firm in this space.” One testimonial described the firm as “nimble and entrepreneurial,” with a “relentless focus on adding value for clients.”
Among its recent notable successes, BFA recovered over $900 million in value from Tesla, Inc.’s Board of Directors, as well as $420 million from Teva Pharmaceutical Ind. Ltd.
For more information about BFA and its attorneys, please visit https://www.bfalaw.com.
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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Microsoft is reportedly planning to combine its Copilot consumer and enterprise artificial intelligence apps.
The tech giant is also eliminating unwanted features so it can ‘earn the right to exist’ in the eyes of customers, according to a memo cited in a Thursday (July 2) report from The Information.
In that memo, Jacob Andreou — the executive vice president in charge of Copilot — said the combined app would also feature AI coding tools and new AI agents for which customers would need to pay extra, the report added.
These agents, known as “AutoPilot,” are designed to be “always-on” ’ to “automate the mundane,” on customers’ behalf, the memo said. PYMNTS has contacted Microsoft for comment but has not yet gotten a reply.
The Information report noted that Microsoft’s Thursday announcement that it was launching a $2.5 billion AI consultancy business could help Copilot.
Dubbed the Microsoft Frontier Company, the new unit will place 6,000 “industry and engineering experts” with Microsoft customers to “co-design, co-innovate, deploy and continuously improve AI systems.”
As the report pointed out, this move mirrors similar efforts from Amazon, OpenAI and Anthropic to make it easier for businesses to use the newest AI tools.
Andreou said his unit has “stripped out what wasn’t working,” such as underused features that Microsoft developed for Copilot tools in some of its enterprise offerings.
The report added that these changes are meant to convince Copilot customers to pay extra for new add-ons that will come with the new combined app, like AI coding tools, AutoPilot agents and other add-ons such as Copilot Cowork.
While those features compete with the likes of Anthropic’s Claude Cowork, Microsoft has taken a conciliatory stance by allowing companies Anthropic build their own plug-ins for its Office software, the report added.
Meanwhile, recent PYMNTS Intelligence research shows a correlation between AI usage at and outside of work.
Among workers whose companies provided access to an AI platform, 78% said they use the same platform at home.
Workers who devote hours to each workday interacting with a specific AI platform naturally develop familiarity with its capabilities, limitations and interface. Moving to another assistant for personal tasks takes additional effort while providing uncertain benefits.
“That dynamic creates a new return on enterprise investment for AI vendors,” the report added. “Every workplace deployment introduces potential future consumer users who have already overcome one of technology’s biggest adoption hurdles: learning how to use the product effectively.”
For all PYMNTS AI coverage, subscribe to the daily AI Newsletter.
Space Exploration Technologies (SPCX +2.83%) is set to be incorporated into the Nasdaq-100 index after the market closes on July 6. The Nasdaq-100 consists of the 100 largest non-financial companies by measure of market capitalization, and inclusion in the index can have a meaningfully positive impact on a company's stock price.
Because funds that track the Nasdaq-100 need to purchase shares of SpaceX to accurately reflect the index's composition, there could be a significant near-term uptick in demand for the stock as a result of the index rebalancing. While its upcoming inclusion in the Nasdaq-100 could be a significant positive catalyst for SpaceX stock, I think there's a company already included in the index that stands out as a much better buying opportunity right now.
Image source: Getty Images.
This AI stock looks like a great long-term buy after pullbacks in 2026 While the trading backdrop for leading artificial intelligence (AI) chip stocks has been incredibly bullish this year, many top software plays have actually been under pressure. Despite posting strong business results and possessing great infrastructure and a wealth of established business relationships that have continued to expand, Microsoft (MSFT +1.69%) has been a poster child for lagging software stocks.
At the end of April, Microsoft published results for the third quarter of its 2026 fiscal year -- which ended March 31. The business posted non-GAAP (adjusted) earnings per share of $4.27 on sales of $82.89 billion, significantly exceeding the average Wall Street estimate of $4.06 on revenue of $81.39 billion. Overall revenue was up 18% year over year, and revenue from the company's Azure and other cloud services businesses rose 40%, beating the average analyst target for growth.
Despite the strong quarter, the company's share price has moved 8% lower since publishing the business update. The stock is also down roughly 19% year to date and 28% from its lifetime high.
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Trading at roughly 20 times this year's expected earnings, Microsoft isn't getting enough credit for its strengths in AI and the broader software market. While there is some risk that the company's core enterprise software offerings could face disruption from new, AI-focused challengers, there's little indication this is happening currently. What's more, Microsoft is hardly resting on its laurels -- and the technology giant has one of the strongest bases in the world when it comes to tech, capital resources, and human talent.
While smaller, more specialized software players may face some substantial threats related to the rise of artificial intelligence, it seems like a mistake to lump Microsoft into that basket. With the company still looking incredibly strong and its stock trading at depressed levels, I think that Microsoft shares stand out as a worthwhile portfolio addition for long-term investors right now.
Keith Noonan 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.
A few days ago, Microsoft (MSFT +1.69%) stock dropped to a 52-week low of about $353. While the stock has rebounded from that level, it's still at a fairly low price point compared to where it has traded over the past year. For the latter half of 2025, Microsoft's stock was in the low- to mid-$500 range, giving investors a major investment opportunity if it can return to all-time highs in the near future.
If you're a long-term investor, I think Microsoft represents one of the most compelling investment opportunities in the entire market. It's well-positioned and cheaply priced, making it a no-brainer buy right now.
Image source: Getty Images.
Microsoft is now cheaper than the broader market Microsoft hardly needs an introduction as a business, as it's a sprawling company that is heavily involved in the tech world. The biggest focus the market has is its artificial intelligence (AI) strategy, which appears to be working out.
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Microsoft's strategy is two-fold. First, it's integrating AI tools into its existing business productivity software via Copilot. Second, it is operating a neutral cloud computing platform that offers multiple generative AI models to use in applications. Its AI business grew its annual recurring revenue at a 123% pace to $37 billion during its latest quarter, and its cloud computing division grew at a 40% pace. Both of those data points make it seem like Microsoft's AI strategy is working out exactly as planned, but the stock market isn't buying what Microsoft is selling.
With Microsoft's major downturn, it now trades for a cheap price tag from a forward earnings perspective.
MSFT PE Ratio (Forward) data by YCharts.
At 19.3 times forward earnings, it's cheaper than the S&P 500, which trades for 21.5. Microsoft has a great track record of strong execution and is growing at a faster-than-market pace, so this discount doesn't seem to make a ton of sense, and conveys that the stock is undervalued.
Another valuation metric I like to use when assessing AI hyperscalers like Microsoft compared to historical levels is the price-to-cash from operations ratio. This looks at how much cash Microsoft is generating and values it versus its market capitalization. From this standpoint, it has been nearly a decade since Microsoft was this cheap.
MSFT Price to CFO Per Share (TTM) data by YCharts.
That tells me that the market is drastically mispricing Microsoft's stock, and now is the perfect time to buy shares.
Keithen Drury has positions in Microsoft. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.
It's been a strangely rough year for Microsoft (MSFT +1.69%) shareholders. Oh, it's not been a surprise. Most investors are now second-guessing the value of jaw-droppingly steep investments in artificial intelligence. As one of the proverbial poster children for the AI revolution, what was so bullish for this ticker beginning in 2023 turned into a liability late last year.
Indeed, shares of the software giant are now down more than 30% from their October peak. If there were ever a reversal brewing, though, this is it.
Still plenty of growth Don't misunderstand. The software giant's certainly got some challenges to deal with now.
For instance, its video gaming business is struggling, so much so that CEO Satya Nadella is reportedly even open to spinning out its Xbox unit into a stand-alone company. Its AI-powered chatbot, Copilot (the free version anyway), isn't gaining market share either. And for the fiscal year currently underway, the company expects to make a jaw-dropping $190 billion worth of capital expenditures, largely on artificial intelligence infrastructure. That's well up from analysts' initial projections and more than 60% above last year's capex.
Now, take a step back and look at the bigger picture. Last quarter's top line was still up 18% (15% in constant currency) year over year, led by 30% growth in its intelligent cloud division, where its AI-facilitating Azure platform's results are reported. Productivity and business software sales improved 17% compared to year-earlier numbers. Operating income improved, too, up 20% to $38.4 billion.
And the foreseeable future looks just as bright. As CFO Amy Hood commented of its all-important Azure business in April's fiscal third-quarter earnings conference call, "broad and growing customer demand continues to exceed supply, and we continue to balance the incoming supply we can allocate here against our other high-ROI priorities," although the same could be said for most of its business lines. That's why the company guided for comparable growth for the quarter that ended in June, while analysts expect a repeat of the company's solid current-year results in the coming fiscal year, with more of the same in the cards further down the road.
Data source: Morningstar. Chart by author.
Unnecessary worry So why is the stock performing so poorly when it seemingly shouldn't be? In simplest terms, investors are just starting to question -- and understandably so -- if the company's bold growth outlook is believable enough to justify such heavy spending on AI.
This worry isn't unique to Microsoft, of course, although it's difficult to deny that this particular company has become something of a proxy for the entire AI industry. The technology giant is arguably more dependent on and more vulnerable to the ongoing proliferation of artificial intelligence than any other, after all, with more than one-third of its revenue directly or indirectly linked to AI. If its proliferation stops or even just slows, Microsoft could feel it more than most.
But that risk finally seems to be abating.
Image source: Getty Images.
While plenty of people are now questioning the practical value of increasingly expensive artificial intelligence, institutional demand for AI solutions hasn't waned one iota. The business may have reached an important tipping point, in fact. As number-crunching from industry research outfit Exponential View highlights, for a second quarter in a row (and for the first time ever), artificial intelligence revenue exceeded the reported depreciation of the equipment facilitating it. It's not the industry's only measure of fiscal viability, but it's an important one that's been nagging investors for a while now.
As for its part in the practical commercialization of AI, although Copilot may not be gaining market share against the likes of ChatGPT or Google's Gemini, Microsoft's more powerful paid version of Copilot, meant to work alongside its other business-oriented software offerings, now has over 20 million users, versus just 15 million paid seats just a quarter earlier. It's certainly something to build on.
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Spring-loaded recovery ready Investors still mostly don't see it, distracted by more than a few other worries at this time. That's why they've elected to let Microsoft shares continue sinking.
There will come a time when this company's resiliency and AI-driven growth become undeniable, though. It could happen as early next month, following the release of its fiscal fourth-quarter results, presuming the market is in a bullish mood at the time. If not then, though, any bearish overhang should be out of the way by the late-October or early-November release of its fiscal first-quarter numbers, dovetailing into the marketwide bullishness we typically see at the end of the year.
Whenever it happens, with the stock now down 30% from October's high, the rebound spring is coiled tightly. It's just waiting to be released. Waiting to step in until that happens, however, likely means you'll miss out on most of whatever early recovery gains are in the cards.
This might help: As it stands right now, over 80% of the analysts covering this stock rate Microsoft a strong buy, with a 12-month consensus price target of $559.02 that's 46% above the ticker's present price. That's not a bad way to start out a new trade.
NEW YORK, July 05, 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:
(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 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.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT, TMUS 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 first half of 2026 is one that Microsoft Corporation NASDAQ: MSFT shareholders would just as soon forget. The stock is down approximately 20% as of July 1. As recently as June 24, MSFT hit a 52-week low of $349.20.
It hasn’t all been downhill. But every time it looked like MSFT was getting ready to recover, something happened to knock it back. Nevertheless, both fundamental and technical signs, starting with a forward price-to-earnings (P/E) ratio of 22.9x, suggest that Microsoft is due for a reversal. That could make MSFT the best big tech trade for the second half of 2026.
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When a Strength Became a WeaknessThe size and scope of Microsoft’s business have worked against it as investors have found multiple reasons for concern. In late 2025, investors were concerned that a hyperscaler like Microsoft would pause or reverse course on its data center capital expenditures.
Instead, the company doubled down on its spending and now plans to spend $190 billion in this calendar year. Of course, that turned into a concern that Microsoft and other hyperscalers are now spending too much money, which will either hit their free cash flow or show up on the balance sheet as debt—neither of which is positive for earnings growth.
Then, the "SaaSpocalypse" hit. The concern was that the emergence of open-source models like Anthropic and OpenAI would reduce demand for Microsoft’s Copilot. However, in its most recent earnings report, the company noted that Copilot had over 20 million paid seats.
One of the latest issues facing the company is the cost of memory. That acutely impacts Microsoft’s gaming division and popular Xbox. It also reminds investors of how interconnected all of these technology companies are, particularly as it relates to the artificial intelligence (AI) infrastructure trade.
That’s a lot of noise for investors to drown out. But for those that can, there’s a strong case for growth in the second half of 2026.
The Numbers Behind the NoiseLet’s start with the fundamentals. Microsoft’s Q3 2026 earnings report undercut the bear case. Revenue grew 18% year-over-year to $82.9 billion, and diluted earnings per share (EPS) rose 23% to $4.27, beating estimates on both lines. The bull case went beyond the headline numbers:
Microsoft Cloud revenue climbed 29% to $54.5 billion, with Azure growing 40% year-over-year, an acceleration from the prior quarter.
Total AI annualized revenue run rate surpassed $37 billion, up 123% from a year ago.
Operating income rose 20% to $38.4 billion.
The company returned $10.2 billion to shareholders through dividends and buybacks.
None of that sounds like a company in trouble, yet the stock kept sliding after the report. However, that disconnect between accelerating fundamentals and a falling share price is exactly what value-oriented traders look for. It suggests the market is pricing in a worst-case scenario that isn’t backed up by the numbers.
MSFT Shows Signs of a Tepid RecoveryThe chart backs up the reversal thesis. MSFT fell from a 52-week high near $555 in October to the June 24 low of $349.20, a decline of roughly 37%.
The RSI sits at roughly 47, climbing back from oversold territory below 30 in April. That April dip marked the stock's sharpest capitulation, followed by a rally above $460 in May before renewed selling pressure returned.
Some of that selling pressure is due to a slowdown in institutional buying. To be clear, institutional buying outweighs selling by over 3:1. But it slowed down in the first two quarters of the year, which has given sellers the upper hand.
That shows up in the Chaikin Money Flow (CMF) indicator. This quantifies money flowing into or out of a security over a set period, typically 20 or 21 trading days. The reading of -0.04 is essentially neutral after spending most of April through June in a downtrend. A shift into positive CMF readings would confirm institutional money is rotating back into the stock.
Shares jumped 3% on July 1, closing at $384.28 on volume of 47.23 million shares, a sign of renewed interest after weeks of drifting lower. A close above the $400 level, which has capped rallies since March, would be the clearest signal yet that the reversal is underway.
The Bear Case Still Deserves a HearingNo trade is without risk. Capital expenditures, including finance leases, hit $31.9 billion in the quarter, up 49% year-over-year, and free cash flow fell 22% to $15.8 billion as a result. If AI demand growth slows, that spending will make MSFT more of a margin story than it already may be.
Plus, the rising memory prices may not be critical, but they are squeezing the More Personal Computing segment, where Xbox hardware revenue fell 33%. If costs remain elevated into the holidays, that pressure could spread further, despite the company’s recent layoff announcement aimed at addressing some of that inefficiency.
Why the Setup Favors Patient BuyersInvestors need to weigh the risks against the valuation. Through that lens, Microsoft still looks attractive. A forward P/E near 23x sits below the stock's five-year average and well under high-flying peers like NVIDIA NASDAQ: NVDA and Palantir NASDAQ: PLTR, despite Microsoft posting some of the most durable growth in the group.
For investors willing to look past near-term volatility, the combination of accelerating AI revenue, a 20-million-seat Copilot business, and a technical setup stabilizing after a brutal correction makes MSFT worth watching closely as the second half of 2026 gets underway.
Should You Invest $1,000 in Microsoft Right Now?Before you consider Microsoft, you'll want to hear this.
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OpenAI reportedly wants to go public at a valuation of $1 trillion or more. And no shareholder has more riding on that number than Microsoft (MSFT +1.69%) -- a company having the worst 2026 of any "Magnificent Seven" member.
The pairing is strange when you line it up. Microsoft shares are down about 19% this year and sit nearly 30% below their 52-week high. Yet the same company owns roughly 27% of what is arguably one of the most valuable private technology companies in the world -- a stake that could soon carry a public price tag.
So does the IPO math change the buy case for a beaten-down Microsoft? Let's run it.
Image source: Getty Images.
The stake math Start with what Microsoft actually owns. When OpenAI completed its restructuring into a public benefit corporation last October, Microsoft disclosed that its investment represented roughly 27% of the company on an as-converted diluted basis, valued at approximately $135 billion. The same agreement extended Microsoft's rights to OpenAI's technology through 2032 and included a commitment from OpenAI to purchase an additional $250 billion of Azure services.
Then came June. OpenAI confirmed it had filed confidential paperwork with the Securities and Exchange Commission for an initial public offering (IPO), the first formal step toward a listing. And according to reporting from The New York Times, the company is now leaning toward a 2027 debut rather than late 2026 -- largely because CEO Sam Altman has reportedly refused to accept a valuation below $1 trillion.
Here's the math that matters for Microsoft shareholders. If OpenAI lists at $1 trillion, a 27% stake would be worth about $270 billion -- roughly double the value implied when the deal was struck, and equal to about 9% of Microsoft's entire $2.9 trillion market capitalization.
Some caveats, however, belong next to that figure.
The IPO timing and price are rumored intentions, not commitments. OpenAI will likely keep raising capital, which can dilute the percentage over time -- the 27% figure already reflects dilution from OpenAI's recent funding rounds. And a listing wouldn't hand Microsoft cash. It would hand it a visible, liquid price for something the market currently values with a shrug.
That last point is the opportunity. Buried inside 2026's worst-performing mega cap sits an asset that could be worth nearly a tenth of the company's market value, and an IPO would force investors to finally price it.
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Meanwhile, the actual business The bulk of the long-term investment case for Microsoft stock doesn't rest on OpenAI, though. Instead, it rests on the underlying business. And the business has continued to perform well while its share price hasn't.
In its fiscal third quarter (ended March 31, 2026), Microsoft's revenue rose 18% year over year to $82.9 billion, earnings per share climbed 23% to $4.27, and Azure and other cloud services revenue grew 40%. For a business of Azure's scale, that's an extraordinary rate.
The stock's problem is what that growth costs. Microsoft expects about $190 billion in capital expenditures in 2026, and management said that figure includes roughly $25 billion just from higher component prices, with memory chips caught in a global supply crunch. Investors have spent the year worrying that spending of that magnitude will weigh on margins for years before it pays off, and they have repriced the stock accordingly.
That repricing, however, is what makes the shares interesting now. Microsoft trades at about 23 times earnings and roughly 20 times forward earnings -- a discount to the premium it commanded throughout most of the artificial intelligence (AI) boom, even as the company still compounds revenue at 18%.
So, where does that leave the stock?
I think it's a buy. With Azure growing at a 40% year-over-year rate, even as the stock trades at just 20 times its forward earnings, it looks attractive even without considering its OpenAI investment. A potential OpenAI IPO is arguably just icing on the cake; a $1 trillion debut would put a public number on a stake the market has been ignoring.
Still, that $190 billion of spending has to earn its keep, and OpenAI's net losses already flow through to Microsoft's results (though the company's own non-GAAP figures specifically strip that impact out). But at this price, with this growth, investors are arguably being compensated for the wait.
Xbox at a gamescom briefing in 2014. Microsoft is pressing its games division to turn a profit. (Microsoft Photo) In 2007, Microsoft’s Xbox 360 consoles started dying — overheating until three lights on the front blinked red, a defect gamers came to call the “red ring of death.” Microsoft’s response was to extend the warranty on every machine and take a charge of more than $1 billion to fix the problem, making it one of the costliest product failures in the company’s history.
Microsoft could afford it financially, but the bigger factor was strategy. Xbox was a bet on the living room, and for a company minting money on Windows and Office at the time, losing a billion or so was a justifiable cost of staying in the game.
Nearly two decades later, that patience has run out.
“Going forward, this cannot continue,” the new Xbox CEO Asha Sharma wrote in a memo to employees last month, offering a blunt assessment of a business that has spent more than $20 billion over five years, only to see its core revenue fall by nearly half a billion dollars, running at a thin 3% profit margin, by Microsoft’s own internal measures.
Asha Sharma took over as CEO of Microsoft’s Xbox business in February. In a memo to employees last month, she wrote that the division’s heavy spending and shrinking revenue “cannot continue.” (Microsoft File Photo) With thousands of layoffs expected to be announced across Microsoft as soon as next week, the Xbox division is likely to be among the hardest hit.
The cuts reach across the company — including sales and consulting — part of a restructuring that has become routine around the close of Microsoft’s fiscal year. But for Xbox, they’re an early step in a broader effort to reset the business, rein in costs, and position the division for healthier profits.
Microsoft CEO Satya Nadella has been blunt about it: the company has spent years subsidizing Xbox rather than profiting from it, and that era is over. The videos and livestreams of people playing Xbox games that fill YouTube generate more money than Microsoft makes from the games themselves, he noted in an appearance on the Hard Fork podcast.
“No one can accuse Microsoft of not having invested for the last 25 years,” Nadella said. “And now we have to turn this into a sustainable business.”
Long-term strategic bet Turning it around means breaking a pattern that runs through Xbox’s entire history.
Xbox launched in 2001 and lost money for most of its first decade. Microsoft absorbed the losses and stayed in — going up against Sony’s PlayStation and Nintendo — because it saw a strategic prize in owning a piece of the living room, and later of mobile. Online gaming also gave the company early experience running services at scale, which fed its cloud ambitions.
Over time, the goal shifted from selling hardware to selling subscriptions.
Xbox Live, launched in 2002, turned online play into recurring revenue. Game Pass, which arrived in 2017, let players pay a monthly fee — the top tier is about $23 — for a library of games, including Microsoft’s own new releases the day they come out. The idea was to get people paying for Xbox everywhere: consoles, PCs, phones and the cloud.
And when growth stalled, Microsoft doubled down. It paid $7.5 billion in 2021 for Bethesda, the studio behind Fallout and The Elder Scrolls, then $69 billion in 2023 for Activision Blizzard (whose games include Call of Duty, World of Warcraft, Diablo and the mobile hit Candy Crush) the largest acquisition in Microsoft’s history.
A series of economic headwinds Microsoft could afford to be patient through all of it. Now it’s not so simple. In recent years, almost everything about the economics of gaming has turned against Xbox at the same time.
Hardware loses money, and AI is making it worse. Microsoft sells consoles at or below cost, banking on games and subscriptions to make up the difference. But AI data centers are consuming so much memory and storage that chip prices have spiked. That has forced Microsoft to raise Xbox console prices, most recently a $100-to-$150 hike this summer that it blamed directly on component costs.
Xbox lost the console war. By most estimates, Sony’s PlayStation 5 has outsold the Xbox Series X and S more than two to one. A smaller base means fewer game sales and subscriptions to offset the upfront hardware losses. That has left Xbox a distant second for the entire generation.
Revenue is shrinking. Even setting aside the games it gained from Activision, Xbox’s annual revenue has fallen nearly $500 million over five years — while the money going into the business keeps climbing. It has been investing more to earn less.
Microsoft’s most recent quarterly filing shows gaming revenue of $16.8 billion for the nine months through March, down about $1.1 billion, or 6%, from a year earlier.
Game Pass cuts into sales. Handing subscribers a new game the day it launches undercuts the roughly $70 they would have paid to buy it. The service delivers steady subscription income, but thinner economics on the games themselves.
Activision didn’t fix the margins. Even with one of gaming’s most profitable businesses folded in, Xbox earns only about 3 cents of profit on every dollar — well under the 17 to 22 cents typical in the industry. If the biggest acquisition in company history can’t move the margin, little will.
Every spare billion is flowing to AI. Microsoft is pouring more than $100 billion a year into the data centers and chips behind its AI push, trying to capitalize on the boom. Against a risk and payoff that big, a gaming business that barely breaks even feels like yesterday’s strategic bet.
What’s next for Xbox The cuts have already started. In recent weeks, Microsoft has signaled plans to close or sell some studios, including Ninja Theory, maker of the acclaimed “Hellblade” series.
Shedding staff, studios and marketing will lift Xbox’s profit margins in the near term. What it won’t do is fix the underlying problem: a business can trim its way to a better number only so much before it has to generate more revenue.
Sharma’s plan, so far, is to concentrate on Xbox’s biggest franchises, funding blockbusters like Halo and Fallout while pulling back elsewhere. It’s leaning on Game Pass and releasing most of its games on PCs and rival consoles from Sony and Nintendo, reaching players well beyond Xbox’s shrinking base, even as it holds back a few new exclusives like Gears of War to give owners a reason to stay.
Microsoft is also rethinking the console itself. In her memo, Sharma described a “hardware component crisis” that has left the company unable to make as many consoles as players want, and called for “a new business model and partnerships” for its hardware.
How far the reset ultimately goes is an open question. The Information reported that Microsoft has weighed making Xbox a standalone subsidiary, a joint venture, or a spin-off, though nothing is imminent.
Microsoft’s response to the Xbox 360 “red ring of death,” July 6, 2007. (Seattle Post-Intelligencer / NewsBank) Whatever happens next, it’s clear that times have changed. In 2007, as the red ring of death crisis emerged, Peter Moore, who ran the Xbox business at the time, and his boss Robbie Bach went to then-CEO Steve Ballmer to ask for the money to repair and replace the failing consoles.
Ballmer didn’t flinch. “What’s it going to cost?” he asked, as Moore later recalled.
Told it was $1.15 billion, Ballmer said, simply: “Do it.”
Moore credits that decision with saving Xbox. There would have been no Xbox One, he said, without Ballmer’s willingness to spend more than a billion dollars to protect the brand.
But nearly two decades later, Microsoft is done writing that kind of check for Xbox.
If you've got $1,000 available to invest for the long term right now, I'd suggest looking at three stocks that are about as close to set-it-and-forget-it as it gets: Microsoft (MSFT +1.69%), Amazon (AMZN +0.55%), and Meta Platforms (META 4.80%). In my view, they are highly likely to outperform the market over a two-decade stretch. That's a bold statement, but given the market positions that my core artificial intelligence (AI) stocks hold, I'm confident in this projection.
Image source: Getty Images.
Microsoft Microsoft has been a dominant force in the tech industry for decades already, so expecting it to maintain that strength for another 20 years isn't far-fetched. It's taking the right steps to stay relevant, including building AI solutions into its business productivity software and investing heavily in cloud computing infrastructure, which will power AI workloads for as long as there are AI workloads to power.
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Microsoft is building out its data centers to ensure there is enough capacity to meet demand, and the clients it lands now will likely be customers for a long time. This makes these early days of execution vital, and with Azure's 40% growth rate, its cloud computing division is doing just fine.
Microsoft is set to have another strong multidecade run, but it just so happens that the stock is also trading near a decade-low valuation level. Because its AI capital expenditures are so high at the moment, the smart way to value the stock is by measuring it against the company's operating cash flow. From this perspective, Microsoft hasn't been this cheap since 2018, and I think that makes the stock an excellent bargain that investors should scoop up today.
MSFT Price to CFO Per Share (TTM) data by YCharts.
Amazon Two decades ago, Amazon was an established and rapidly growing e-commerce business. Now that its e-commerce platform is mostly built out (at least in the U.S.), it's looking for other areas to grow into. Amazon was the first major cloud computing provider to emerge, and Amazon Web Services (AWS) is the largest cloud provider in the world. In 2026, it plans to spend $200 billion on data center capital expenditures, and CEO Andy Jassy has informed investors that there are already customers signed up to lease that new capacity as soon as it's ready.
I think this will help Amazon establish itself as a great business to buy and hold over the next two decades.
Amazon, too, is trading near a decade-low price-to-operating-cash-flow level, so it looks like a strong stock pick.
AMZN Price to CFO Per Share (TTM) data by YCharts.
Meta Platforms Meta Platforms may be the most controversial stock on my list. Meta Platforms was formerly known as Facebook -- a social media platform that launched in early 2004. So, its entire existence barely spans two decades. However, given the pervasiveness of its social media empire, I think Meta can easily last for another two decades, as long as it can pivot effectively to stay on top of the trends. A few years ago, it looked like the next big trend would be the metaverse, which prompted both the company's name switch and many years of major capital outlays. While that didn't pan out, Meta was recognized as a leader in that space. Now, the tech world's focus has shifted to AI, and Meta is investing to ensure that it can compete in this realm.
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While it hasn't made a ton of mainstream AI breakthroughs, it has used the technology to improve its advertising operation, which led to 33% year-over-year revenue growth in the past quarter. If Meta can continue delivering such results, it will be a great stock to own. If it can launch an AI product that captures the attention of the masses, it will be a must-own stock, as no upside from such a speculative outcome is currently priced into the stock.
Moreover, Meta trades at a price-to-operating-cash-flow ratio even lower than those of Microsoft and Amazon.
META Price to CFO Per Share (TTM) data by YCharts.
This makes Meta a major bargain, and if it can continue to evolve to meet the social network developments over the next two decades, it will prove a great stock holding.
The month of June felt eerily reminiscent of December 2000 for Microsoft (MSFT +1.69%). The software behemoth shed more than $570 billion in market cap in the past month. The stock is back to where it was in 2023. The drop has been brutal for current investors, but for those in it for the long haul, could this be a rare opportunity to buy?
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Don't let fear overrun strong fundamentals The crushing of Microsoft's stock this month is more about fears and skepticism than actual fundamentals, in my opinion. Microsoft is spending money on artificial intelligence and data centers at an incredible rate. Expenditures are projected to reach $190 billion in 2026, a 63% year-over-year increase. This is causing concern on Wall Street as investors struggle to justify the heavy spending.
Image source: The Motley Fool.
Investors are worried that investment in AI infrastructure will erode margins. With tools such as Word and Excel facing new competition from AI tools, will the company sustain permanent damage as well? These fears are justified but largely overblown. Microsoft's Azure and other cloud services increased revenue by 39% in the past quarter, but that wasn't enough to calm investors.
It's worth noting that Microsoft is still expecting revenue to grow 17% this fiscal year. The company's financials are strong, and shareholders received $12.7 billion in dividends and share repurchases in the second quarter of 2026, which is a 32% increase from the year prior.
Microsoft's current valuation is an opportunity. In times like this, I try to remember the wisdom of Warren Buffett, who preaches that good investors are greedy when others are fearful. For Microsoft investors, the recent 20% decline fits Buffett's mantra.
Catie Hogan 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.
New York, New York--(Newsfile Corp. - July 3, 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"); andas 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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Prior results do not guarantee similar outcomes.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/301526
Source: Bronstein, Gewirtz & Grossman, LLC
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Deciding between the Schwab U.S. Broad Market ETF (SCHB 0.14%) and the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF(SPTM 0.10%) involves choosing between two exceptionally low-cost vehicles that differ primarily in their index depth and total holding counts.
Both funds provide simple, efficient entries into the broad U.S. stock market for a fraction of the cost of active management. These total market funds are often used by investors as foundational blocks to ensure they do not miss out on the growth of smaller companies while maintaining heavy exposure to proven blue-chip leaders. While one tracks the S&P Composite 1500, the other follows the Dow Jones U.S. Broad Stock Market Index.
Snapshot (cost & size)MetricSPTMSCHBIssuerSPDRSchwabShare price$90.63 (as of 2026-07-01)$28.91 (as of 2026-07-01)Expense ratio0.03%0.03%1-yr return (as of 2026-07-01)22.4%22.8%Dividend yield1.1%1.1%Beta1.001.01AUM$13.6B$43.2BBeta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Expense ratios for both products sit at 0.03%, placing them among the most affordable core ETFs available today. This means for every $10,000 invested, an investor pays just $3 in annual management fees. Dividend yields are also identical at 1.1%, suggesting that income-seeking investors will find little to differentiate these two based on payout alone.
Performance & risk comparisonMetricSPTMSCHBMax drawdown (5 yr)-24.1%-25.4%Growth of $1,000 over 5 years (total return)$1,815$1,761What's insideSchwab U.S. Broad Market ETF (SCHB 0.14%) aims to replicate the Dow Jones U.S. Broad Stock Market Index, a benchmark that includes large, mid, and small-cap stocks. Its portfolio of 2,357 holdings is heavily tilted toward technology at 37%, followed by financial services at 11%, and communication services at 10%. Its largest positions include Nvidia Corp (NVDA 1.39%) at 6.59%, Apple Inc (AAPL +4.88%) at 5.95%, and Microsoft Corp (MSFT +1.69%) at 3.93%. The fund was launched in 2009. Schwab U.S. Broad Market ETF has paid $0.30 per share over the trailing 12 months, which on its recent ~$28.91 share price works out to a 1.1% yield.
State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM 0.10%) tracks the S&P Composite 1500 Index, which provides a representative sample of approximately 90% of the investable U.S. market. The fund maintains 1,511 holdings, with sector concentrations in technology at 37%, financial services at 11%, and consumer cyclical at 10%. Top holdings include Nvidia Corp (NVDA 1.39%) at 6.86%, Apple Inc (AAPL +4.88%) at 6.20%, and Microsoft Corp (MSFT +1.69%) at 4.09%. The fund was launched in 2000. State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF has paid $0.97 per share over the trailing 12 months, which on its recent ~$90.63 share price works out to a 1.1% yield.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investorsBroad market ETFs seek to be the ultimately diversifier, all stock in one ETF wrapper. They invest in the entire market, or at least most of it, including small-, mid-, and large-cap stocks.
So when it comes to comparing broad market ETFs like these, is there really any difference? Yes, there is, but not much.
The SPDR ETF, while broad market, only tracks about 1,500 stocks, so roughly 90% of the investable universe, leaving off some microcaps. The Schwab ETF goes a bit deeper, with nearly 2,400 stocks.
While the returns are similar over the past year, with both up about 21%, the SPDR ETF has slightly better long-term performance over the past 5 and 10-year periods. But the difference is neglible. The State Street ETF has a five-year annualized return of 12.6% while the Schwab ETF has a five-year annualized return of 12%.
They both have ultra low expense ratios and the same distribution yields, so there is no difference there, either. If you are looking for a broad market diversifier, you really canʻt go wrong with either one of these ETFs. If you want slightly more diversification, go with the Schwab ETF but both would be solid options.
The Magnificent Seven have been dragging their feet, at least relative to the rest of the tech scene in the past year. And while the semiconductor basket is the new leadership group that could continue to do more of the heavy-lifting as more investors crowd into the “pick and shovels” plays that are profiting in the moment, rather than spending heavily now with no clues as to what kind of monetization there will be in the future, I do think that the tides could turn and in a sudden manner that could once again crown the Magnificent Seven names as magnificent again. Because, of late, they’re anything but magnificent, especially when it comes to the hyperscalers that are raising the bar on CapEx.
Why the Mag Seven might be ready to take the lead again as semis step back Moving into the new year, the fear is that CapEx will go higher again for the broad basket of names, but what happens if the coming increase to the bill is already priced in? And what happens if the CapEx for next year comes in lighter than investors anticipate? Perhaps that could cause a massive reversal from the big AI money-makers (the chip plays) to the big spenders (the hyperscalers and Mag Seven).
Even if spending does keep moving higher, we can’t forget about the monetization factor, which many like to doubt, but might actually surprise everyone as the Mag Seven become more focused on finally bringing in cash flow from AI efforts, rather than just spending aggressively.
Meta Platforms‘ (NASDAQ:META | META Price Prediction) move to sell AI compute to others is just one of many moves that could bring some of the enthusiasm back to the Mag Seven as the market views them as not only big spenders, but big beneficiaries as the AI monetization wave looks to hit.
As always, though, the timing of such a wave remains a question mark, but for long-term investors, I’d say the risk/reward on much of the Mag Seven is just too good to ignore right now.
Dan Ives likes the Mag Seven setup; doesn’t seem to mind the high CapEx I’m not the only fan of the Mag Seven at these prices. From Pershing Square’s Bill Ackman, who recently helped himself to a big stake in Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) last quarter, to the great Dan Ives, who recently departed Wedbush Securities to pursue a new venture, as well as many other hedge funds, there’s a lot of belief in the Mag Seven.
In a recent sitdown with Bloomberg, Dan Ives said that he expected the Mag Seven cohort to outperform “significantly” in the second half of the year. That’s big. And we’ve already seen glimmers of magnificence from the group in the past week, with Meta Platforms blasting off as Meta Compute was unveiled, while Apple (NASDAQ:AAPL) rocketed close to 5% on Thursday, while much of the semiconductor plays sagged lower.
I think this semi-to-Mag Seven rotation is just getting started as investors move on from just the picks and shovels. Ives justified the CapEx the Mag Seven is paying, comparing it to the construction of the Las Vegas Strip way back in the day. I think he’s right. They aren’t just “spending to spend,” as Ives put it.
The bottom line There’s a grand plan in place from some of the smartest minds in the tech world. And I think it makes sense to stick with the group, even as they fall relatively out of favor. While I like the broad basket, Microsoft definitely stands out, even after soaring nearly 10% in a week. The firm really “owns the enterprise,” as Ives put it. He’s absolutely right.
For months, the knock on Meta Platforms (META 4.80%) hasn't been its business. It has been the bill. When management raised its 2026 capital expenditures guidance in April to a range of $125 billion to $145 billion, shares sank on the news. And heading into Wednesday, the stock was down nearly 15% for the year, sitting well below its 52-week high of $796.25 -- even as the company reported accelerating growth.
Then investors got a look at what could become the other side of that spending story. Bloomberg reported Wednesday that Meta is developing plans for a cloud business that would sell access to artificial intelligence (AI) computing power and models, putting the social media company in competition with the cloud units of Amazon and Microsoft. Shares jumped 8.8% to $612.91.
The reaction makes sense. But can renting out computing capacity actually change the return math on one of the biggest capital spending programs in corporate history?
Image source: Getty Images.
What Meta is reportedly planning According to Bloomberg, the effort is internally called Meta Compute, and the company is debating two approaches: giving developers access to AI models hosted on Meta's infrastructure, or selling raw computing power. The report said the plans are still in development and could change. And it's worth emphasizing that Meta hasn't announced anything.
Still, the idea isn't coming out of nowhere. CEO Mark Zuckerberg said in May that selling excess computing capacity was "definitely on the table" if Meta ends up building more data center capacity than it needs, according to the report.
Overbuilding is precisely the worry that has weighed on the stock. Meta's spending plan for 2026 -- raised in April from a prior range of $115 billion to $135 billion -- compares to $72.2 billion in capital expenditures in 2025. In other words, spending could double this year.
And unlike Amazon, Microsoft, and Alphabet, Meta has no cloud computing business renting its infrastructure to outside customers. Every dollar of return on those data centers has to come from Meta's own products, mainly advertising. If the company builds more capacity than its apps and AI ambitions need, the excess earns nothing. A cloud business would change that equation, turning idle capacity into revenue -- and giving Meta a source of sales beyond the ad market.
The spending may already be paying off What's easy to miss in the debate over Meta's spending is that the core business is accelerating -- a sign its AI investments are already generating returns. First-quarter revenue rose 33% year over year to $56.3 billion -- a step up from 24% growth in the fourth quarter of 2025 and 22% growth for the full year.
In addition, the company is making progress on its efforts to build a superintelligence.
"We're on track to deliver personal superintelligence to billions of people," said Zuckerberg in the company's first-quarter earnings release.
None of this makes the reported cloud plan a sure thing -- or even a near-term one. Building an enterprise cloud business requires sales teams, support operations, and reliability commitments that Meta would be starting mostly from scratch, while Amazon and Microsoft have spent nearly two decades building exactly that. And selling raw computing capacity tends to carry lower margins than Meta's advertising business. So even if the reported plans turn into a product, it could take years for the revenue to matter.
Today's Change
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Current Price
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583.50
In the meantime, the stock's valuation looks undemanding. After Wednesday's jump, Meta trades at about 21 times earnings -- a multiple that arguably still reflects the market's skepticism about all that spending rather than the company's growth.
To me, the stock is a buy -- just not because of Wednesday's report. An unconfirmed plan shouldn't be anyone's investment thesis. The better reason is the combination of an accelerating core business and a modest valuation. The reported cloud business is best viewed as a free option: If it launches, Meta gains a second way for its AI infrastructure to pay off. If it never does, buyers today still own one of the market's fastest-growing big tech companies at a reasonable price.
There are risks. Spending could climb even higher, and advertising demand can turn quickly in a weak economy. But among big tech's AI spenders, Meta now offers a rare combination: accelerating growth, a modest multiple, and if the report proves right, a new way to get paid for all those data centers.
LOS ANGELES, July 03, 2026 (GLOBE NEWSWIRE) -- The Schall Law Firm, a national shareholder rights litigation firm, reminds investors of a class action lawsuit against Microsoft Corporation (“Microsoft” or “the Company”) (NASDAQ: MSFT) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission.
Investors who purchased the Company’s securities between May 1, 2025 and January 28, 2026, inclusive (the “Class Period”), are encouraged to contact the firm before August 11, 2026.
If you are a shareholder who suffered a loss, click here to participate.
We also encourage you to contact Brian Schall of the Schall Law Firm, 2049 Century Park East, Suite 2460, Los Angeles, CA 90067, at 310-301-3335, to discuss your rights free of charge. You can also reach us through the firm's website at www.schallfirm.com, or by email at [email protected].
The class, in this case, has not yet been certified, and until certification occurs, you are not represented by an attorney. If you choose to take no action, you can remain an absent class member.
According to the Complaint, the Company made false and misleading statements to the market. Microsoft’s Copilot AI products suffered from problems ranging from poor user experience to capacity limitations. The Company’s AI model ranked poorly against competitors on industry benchmark tests. The Company would need to spend billions on capital expenditures related to AI including diverting hardware away from profitable business units to improve its competitive posture in artificial intelligence. The Company was incapable of converting a large percentage of Microsoft 365 users to paid Copilot subscriptions, losing market share to rivals. Based on these facts, the Company’s public statements were false and materially misleading throughout the class period. When the market learned the truth about Microsoft, investors suffered damages.
Join the case to recover your losses.
The Schall Law Firm represents investors around the world and specializes in securities class action lawsuits and shareholder rights litigation.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and rules of ethics.
CONTACT:
The Schall Law Firm
Brian Schall, Esq.,
www.schallfirm.com
Office: 310-301-3335 [email protected]
Microsoft (MSFT - Free Report) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.
Shares of this software maker have returned -8.8% over the past month versus the Zacks S&P 500 composite's -1.7% change. The Zacks Computer - Software industry, to which Microsoft belongs, has lost 16.4% over this period. Now the key question is: Where could the stock be headed in the near term?
While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.
Earnings Estimate RevisionsHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Microsoft is expected to post earnings of $4.21 per share for the current quarter, representing a year-over-year change of +15.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.
For the current fiscal year, the consensus earnings estimate of $17.33 points to a change of +27.1% from the prior year. Over the last 30 days, this estimate has remained unchanged.
For the next fiscal year, the consensus earnings estimate of $19.29 indicates a change of +11.3% from what Microsoft is expected to report a year ago. Over the past month, the estimate has remained unchanged.
With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Microsoft.
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Revenue Growth ForecastEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
For Microsoft, the consensus sales estimate for the current quarter of $87.44 billion indicates a year-over-year change of +14.4%. For the current and next fiscal years, $329.26 billion and $381.62 billion estimates indicate +16.9% and +15.9% changes, respectively.
Last Reported Results and Surprise HistoryMicrosoft reported revenues of $82.89 billion in the last reported quarter, representing a year-over-year change of +18.3%. EPS of $4.27 for the same period compares with $3.46 a year ago.
Compared to the Zacks Consensus Estimate of $81.4 billion, the reported revenues represent a surprise of +1.83%. The EPS surprise was +4.91%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.
ValuationWithout considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Microsoft is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Microsoft. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
NEW YORK, July 03, 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.”
Click here for more information: https://www.bfalaw.com/cases/microsoft-class-action-lawsuit.
What Can You Do?
If you invested in Microsoft, you may have legal options and are encouraged to submit your information to the firm.
All representation is on a contingency fee basis; there is no cost to you. Shareholders are not responsible for any court costs or expenses of litigation. The firm will seek court approval for any potential fees and expenses.
BFA is a leading international law firm representing plaintiffs in securities class actions and shareholder litigation. It has been named a top plaintiff law firm by Chambers USA, The Legal 500, and ISS SCAS, and its attorneys have been named “Elite Trial Lawyers” by the National Law Journal, “Litigation Stars” by Benchmark Litigation, among the top “500 Leading Plaintiff Financial Lawyers” by Lawdragon, “Titans of the Plaintiffs’ Bar” by Law360 and “SuperLawyers” by Thomson Reuters.
Most recently, The Legal 500 awarded BFA the most client satisfaction accolades of any plaintiff’s securities litigation law firm, with clients noting: “[t]here is no better service provider in the practice area,” “[t]he interest of the client is always front and center,” and “[t]here isn’t a better firm in this space.” One testimonial described the firm as “nimble and entrepreneurial,” with a “relentless focus on adding value for clients.”
Among its recent notable successes, BFA recovered over $900 million in value from Tesla, Inc.’s Board of Directors, as well as $420 million from Teva Pharmaceutical Ind. Ltd.
For more information about BFA and its attorneys, please visit https://www.bfalaw.com.
Světové akciové indexy v prvním pololetí vesměs rostly, nejvíce jihokorejský, japonský a tchajwanský. Americký index Nasdaq 100 , v němž je mnoho firem z odvětví vyspělých technologií, je od začátku roku výše o 17,9 procenta, širší index S&P 500 přidal 9,6 procenta. Panevropský index STOXX Europe 600 pak od začátku roku vykazuje sedmiprocentní růst, vyplývá z burzovních statistik.
"Americké indexy stále těží z vysokého zastoupení technologií a z investic do infrastruktury pro umělou inteligenci (AI). Ty se promítají nejen do zisků firem, ale i do celého HDP. Zatímco výrobci hardwaru pro datová centra letí, samotným 'hyperscalerům', zejména Meta, Microsoft, se moc nedaří kvůli velkým očekávaným kapitálovým výdajům," řekl ČTK analytik Portu Marek Pokorný.
Evropa podle něj zažila silnější druhé čtvrtletí, než se čekalo. Index Euro Stoxx 50, zaměřený na eurozónu, je od začátku roku vyšší o sedm procent a koncem června uzavřel na rekordu. Rozdíly mezi jednotlivými trhy jsou ale velké. Britský index FTSE 100 vede s růstem o sedm procent, francouzský CAC 40 přidal pět procent, německý DAX ale se dvěma procenty zaostává. Dařilo se čipovým titulům, rostl i průmysl a energetika navázané na infrastrukturu pro AI, jako jsou firmy Siemens, Siemens Energy, ABB a Schneider Electric. Pokorný zmínil také banky, a sice UniCredit, BNP Paribas nebo ING.
Asijské trhy zůstávají absolutní jedničkou roku, tažené polovodičovými ekonomikami. Japonský index Nikkei 225 je od začátku roku výše o 32 procent a dostal se na maximum od roku 1989. Nejlepším velkým trhem světa zůstává Jižní Korea, kde hlavní index KOSPI od začátku roku vzrostl o 77 procent. Táhnou ho výrobci paměťových čipů Samsung Electronics a SK Hynix, jejichž akcie dohromady tvoří polovinu trhu a hlásí rekordní zisky díky zájmu o AI.
Tchajwanský TAIEX je letos výše o 59 procent, motorem je opět polovodičový sektor. Naopak Čína a Indie letos patří mezi trhy, které zaostávají. Čínský index CSI 300 je v plusu dvě procenta, index hongkongské burzy Hang Seng ztrácí šest procent následkem propadem akcií Alibaba a Tencent kvůli obavám o marže z AI investic a slabé domácí spotřebě. Indický index Nifty 50 ztrácí osm procent a řadí se mezi tři nejhorší velké trhy světa. Latinská Amerika pokračuje v solidní výkonnosti. Index MSCI EM Latin America si drží zisk kolem 13 procent a těží z vazby na energetiku, těžbu a další exportní sektory.
Naprostou hvězdou roku jsou stále výrobci pamětí a úložišť. SanDisk letos přidal přes 850 procent, Western Digital 218 procent, Micron Technology 227 procent a Seagate 218 procent. Výrazný růst má za sebou také Intel, Dell, AMD či Applied Materials, upozornil Pokorný.
Podle sektorů se nedaří takzvaným 'hyperscalerům', luxusu či automobilkám, nejlépe na tom není ani obrana a zlato. Společnost Meta Platforms je letos v mínusu šest procent, Microsoft ztrácí 19 procent. Investoři přestali odměňovat vysoké kapitálové výdaje do datových center a zatím je přehodnotili z růstového na nákladový příběh. Index S&P Global Luxury je letos dole o desetinu. Pod tlakem zůstávají také automobilky, a to kvůli slabé poptávce v Číně, tamní konkurenci a celním bariérám.
Do stejné skupiny letos patří i zlato, kde pokles činí sedm procent, a zbrojaři, jako je BAE Systems, Rheinmetall či Palantir. Akcie firmy Rheinmetall minulý týden spadly o 21 procent po zprávě, že Německo zrušilo zakázku na fregaty. Zakázka měla firmě v dalších letech vynést až 15 miliard dolarů, uzavřel Pokorný.
Microsoft's (MSFT +1.69%) stock had one of its worst months of performance in June.
*Stock prices used were the afternoon prices of June 30, 2026. The video was published on July 2, 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.
Microsoft Corp (NASDAQ:MSFT) announced a $2.5 billion investment to launch Microsoft Frontier Company, a new operating business focused on helping organizations deploy artificial intelligence at scale by embedding engineering and industry experts directly within customer operations.
The company said it will place 6,000 engineers, consultants, customer support specialists and industry-focused sales professionals with customers to co-design, deploy and continuously improve AI systems tailored to their businesses. Microsoft said the initiative expands on the industry's "forward-deployed engineering" model by combining AI engineering expertise with industry knowledge and change management capabilities.
Rodrigo Kede Lima, who currently leads Microsoft's Asia business, will serve as president of Microsoft Frontier Company.
According to Microsoft, the new unit is intended to help customers move beyond AI experimentation and focus on measurable business outcomes and returns on investment while protecting proprietary data and intellectual property.
The company said the platform will allow customers to use AI models from multiple providers, including OpenAI, Anthropic, Microsoft AI, open-source models and industry-specific models, rather than requiring a single vendor. Microsoft also emphasized that customer data and intellectual property will not be used to train AI models in ways that could diminish a company's competitive advantage.
Microsoft cited early deployments with organizations including London Stock Exchange Group (LSEG), Land O'Lakes, Unilever and Novo Nordisk (NYSE:NVO), saying the projects have produced measurable business outcomes by integrating AI into business workflows.
The company added that it will work with global systems integration partners, including Accenture, Capgemini, EY, KPMG and PwC, to expand the initiative worldwide.
The announcement comes as competition among major technology companies to help enterprises implement AI continues to intensify. Earlier this week, Amazon announced a $1 billion AI implementation initiative, while OpenAI and Anthropic have also established customer deployment teams this year aimed at accelerating enterprise AI adoption.
Microsoft is expected to lay off up to 2.5% of its workforce as early as next week.
The cuts, which could affect 5,000 employees, may impact sales, consulting and the Xbox gaming unit, according to a report from Business Insider Tuesday.
The layoffs would mark the latest round of restructuring in the tech sector as companies continue to cut costs while directing more resources toward artificial intelligence (AI).
Last summer, Microsoft laid off roughly 4% of its workforce, or about 9,000 employees, in one of the company's largest rounds of job cuts in recent years.
MICROSOFT ANNOUNCES ANOTHER ROUND OF LAYOFFS AFFECTING THOUSANDS OF WORKERS
A Microsoft office in New York in July 2025 ahead of the company hitting $4 trillion in market cap. (Adam Gray/Bloomberg via Getty Images / Getty Images)
According to Microsoft's latest annual filing with the Securities and Exchange Commission (SEC), the company employed roughly 228,000 full-time workers worldwide as of June 30, 2025.
A 2.5% reduction in that workforce would amount to approximately 5,700 job cuts.
Sources said some employees affected by the latest round of layoffs will be offered new roles within the company immediately, Business Insider reported.
MICROSOFT WILL LAY OFF NEARLY 6,000 EMPLOYEES IN PUSH FOR EFFICIENCY
A pedestrian walks past a sign on the Microsoft campus July 17, 2014, in Redmond, Wash. (Stephen Brashear/Getty Images / Getty Images)
In the past month, Microsoft’s stock slumped about 19%, marking one of its worst monthly performances since the dot-com crash.
Investor concerns have risen as Wall Street analysts warn that AI could eventually replace certain software services, which may include offerings from Microsoft.
MICROSOFT PLANS ‘SUBSTANTIAL’ JOB CUTS ACROSS XBOX DIVISION
Ticker Security Last Change Change % MSFT MICROSOFT CORP. 390.49 +6.21 +1.62% Last month, Xbox CEO Asha Sharma sent a memo to employees calling for a "reset" of the business after months of uneven performance.
The Verge on Tuesday also reported that the gaming division is planning layoffs starting next week. The cuts are expected to be significant, with reductions to marketing and budgets, according to Bloomberg early last month.
The restructuring could lead to studio closures, mergers, spin-offs and canceled game projects, the Verge reported.
Xbox also recently raised prices on its gaming consoles by an additional $100 to $150 worldwide, citing increased demand for memory and storage driven by the AI boom.
Visitors walk past the Xbox booth at the Gamescom video games trade fair in Cologne, Germany, Aug. 22, 2024. (Ina Fassbender/AFP via Getty Images / Getty Images)
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Sources said the 2026 round of layoffs appears to be smaller after the company earlier this year introduced a voluntary retirement buyout program, which led to a significant number of employees exiting, according to BI.
Roughly one-third of eligible employees reportedly opted in.
Last year, Microsoft reportedly eliminated roughly 15,000 roles across multiple rounds of layoffs, including about 6,000 positions in May followed by 9,000 employees in July.
FOX Business reached out to Microsoft for more information.
Microsoft Corp (NASDAQ:MSFT) announced a $2.5 billion investment to launch Microsoft Frontier Company, a new operating business focused on helping organizations deploy artificial intelligence at scale by embedding engineering and industry experts directly within customer operations.
The company said it will place 6,000 engineers, consultants, customer support specialists and industry-focused sales professionals with customers to co-design, deploy and continuously improve AI systems tailored to their businesses. Microsoft said the initiative expands on the industry's "forward-deployed engineering" model by combining AI engineering expertise with industry knowledge and change management capabilities.
Rodrigo Kede Lima, who currently leads Microsoft's Asia business, will serve as president of Microsoft Frontier Company.
According to Microsoft, the new unit is intended to help customers move beyond AI experimentation and focus on measurable business outcomes and returns on investment while protecting proprietary data and intellectual property.
The company said the platform will allow customers to use AI models from multiple providers, including OpenAI, Anthropic, Microsoft AI, open-source models and industry-specific models, rather than requiring a single vendor. Microsoft also emphasized that customer data and intellectual property will not be used to train AI models in ways that could diminish a company's competitive advantage.
Microsoft cited early deployments with organizations including London Stock Exchange Group (LSEG), Land O'Lakes, Unilever and Novo Nordisk (NYSE:NVO), saying the projects have produced measurable business outcomes by integrating AI into business workflows.
The company added that it will work with global systems integration partners, including Accenture, Capgemini, EY, KPMG and PwC, to expand the initiative worldwide.
The announcement comes as competition among major technology companies to help enterprises implement AI continues to intensify. Earlier this week, Amazon announced a $1 billion AI implementation initiative, while OpenAI and Anthropic have also established customer deployment teams this year aimed at accelerating enterprise AI adoption.
Microsoft is mobilizing 6,000 employees in a new unit aimed at helping enterprise clients better utilize AI. Judson Althoff, CEO of Microsoft's commercial business, discusses what is driving this move and what impact Microsoft hopes to see.
I keep hitting the buy button on Microsoft (NASDAQ:MSFT | MSFT Price Prediction), and the June selloff only made me press it harder. When the tape dragged this stock down to $373 in June while the underlying business printed 18.3% revenue growth, my thesis stopped being a thesis and started feeling like a gift. I own this for the next twenty years of retirement income, through many cycles of noisy headlines.
What pulls me back is boring in the best way. Microsoft sells the plumbing every enterprise on earth now depends on: Windows, Office 365, Azure, GitHub, Dynamics, LinkedIn. Companies do not rip that stack out during a recession. They renew it, expand it, and pay more for it every cycle. That is the cash-flow utility I want anchoring my portfolio.
Three Reasons I Keep Adding First, the operational reality is running in the opposite direction of the stock chart. Q3 FY26 delivered EPS of $4.27 against a $4.07 estimate, the fourth consecutive beat, on $82.89 billion in revenue. Intelligent Cloud grew 30%, Azure grew 40%, and the AI business now runs at a $37 billion annualized rate, up 123% year over year. Alpha Vantage shows 12 consecutive quarterly beats and an 83.8% beat rate across 130 quarters. That is a compounding machine.
Second, the forward book is enormous. Commercial remaining performance obligations reached $627 billion, up 99%. Contracted revenue at that scale is a multi-year visibility signal I do not get from most large caps. Layer on the restructured OpenAI deal, where Microsoft holds a ~27% stake valued around $135 billion and secured IP rights through 2032 plus an incremental $250 billion Azure commitment, and I own a piece of the frontier without owning the burn.
Third, the balance sheet and returns profile do the heavy lifting. ROE of 33.28%, operating margin of 45.62%, interest coverage of 53.89x, and debt-to-equity of 0.176. Trailing P/E of 22 and forward P/E of 19 on a business compounding EPS at this pace is the kind of setup I rarely get outside of a market panic. The dividend yields only 1.01%, but Microsoft returned $12.7 billion to shareholders last quarter through dividends and buybacks, up 32%.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.
The Risk I Will Not Wave Away Capex is the real concern. Q3 capital expenditures hit $30.88 billion, up 84.39%, and Microsoft’s share of OpenAI losses ran $3.1 billion in Q1 FY26 against $523 million a year earlier. If AI monetization stalls, that spend gets ugly. What keeps me buying is the response function on the other side of the ledger: operating income grew 19.99% and operating cash flow grew 26.01% in the same quarter the capex nearly doubled. The customers are paying for the buildout in real time.
I also noticed 13 board members quietly accumulated shares on June 5 during the drawdown, and the Chief Accounting Officer picked up 5,004 shares on June 15. That is a group leaning into its future.
Why the Buy Button Stays Live Ten-year total return on this stock sits at 724.68%, and the fundamentals underneath it look stronger today than they did at the beginning of that run. When the market hands me a global cash-flow utility at 19 times forward earnings with a $627 billion backlog, I do not overthink it. I buy the plumbing, collect the compounding, and let time do the rest.
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Key Takeaways MSFT launches new Surface devices in Thailand ahead of July 23 sales after July 1 early-bird registration.MSFT's refreshed lineup uses Snapdragon X2 chips with AI features, faster graphics and longer battery life.MSFT faces Devices sales pressure as it guides More Personal Computing revenues to $11.8-$12.3B for fiscal Q4. Microsoft (MSFT - Free Report) is rolling out its next-generation Surface Pro and Surface Laptop lineup, with Thailand becoming the latest market to receive the devices ahead of official sales on July 23, 2026, following early-bird registration that opened July 1.
The refreshed hardware, powered by Qualcomm's Snapdragon X2 processors, targets professionals and creators seeking on-device AI performance alongside cloud-based workflows. The Surface Laptop's 13.8-inch and 15-inch models offer up to 58% more graphics performance than their predecessors, with battery life reaching up to 20 hours on the smaller model and 19 hours on the larger one. Display sharpness on the 15-inch variant has also improved, with pixel density climbing from 201 to 262 PPI.
The launch arrives as Microsoft's device business continues to face headwinds. In its third-quarter fiscal 2026 results, Windows OEM and Devices revenues declined 2% (down 3% in constant currency), contributing to a 1% overall decline in the More Personal Computing segment, which totaled $13.2 billion. That followed a second-quarter fiscal 2026 period in which Windows OEM and Devices revenues had actually grown 1%, even as total segment revenues fell 3% due to softer Xbox and other consumer categories.
For the fourth quarter of fiscal 2026, Microsoft has guided More Personal Computing revenues to a range of $11.8 billion to $12.3 billion, reflecting continued uncertainty tied to broader PC market conditions.
Against this backdrop, the new Surface rollout represents a modest but deliberate push to reinvigorate premium hardware demand through performance and battery-life upgrades rather than aggressive pricing.
How Apple and Dell Compare in the Premium Device RaceMicrosoft's Surface push places it against Apple (AAPL - Free Report) and Dell Technologies (DELL - Free Report) in the premium computing space. Apple continues to lean on its MacBook lineup and custom silicon to defend margins, while Dell remains focused on enterprise and business-class notebooks alongside its own AI-capable PC offerings. Apple's ecosystem advantage and brand loyalty give it steady premium demand, whereas Dell's scale in commercial channels provides resilience during soft consumer cycles. Compared with Apple and Dell, Microsoft's Surface strategy leans more heavily on hybrid form factors and Copilot+ AI integration, positioning it as a differentiated, if smaller, player among these three hardware competitors.
MSFT’s Share Price Performance, Valuation & EstimatesMSFT shares have lost 18.7% in the past six-month period compared with the Zacks Computer – Software industry’s decline of 21.4%. The Zacks Computer and Technology sector has appreciated 15.8% 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 22.92X, higher than the industry’s 17.2X. MSFT has a Value Score of C.
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.
, /PRNewswire/ -- Glancy Prongay Wolke & Rotter LLP announces that investors with losses have opportunity to lead the securities fraud class action lawsuit against Microsoft Corporation ("Microsoft" or the "Company") (NASDAQ: MSFT).
IF YOU SUFFERED A LOSS ON YOUR MICROSOFT INVESTMENTS, CLICK HERE BEFORE AUGUST 11, 2026 (LEAD PLAINTIFF DEADLINE) TO PARTICIPATE IN THE SECURITIES FRAUD LAWSUIT
What Is The Lawsuit About?
The complaint filed alleges that, between May 1, 2025 and January 28, 2026, Defendants failed to disclose to investors: (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.
Contact Us To Participate or Learn More:
If you wish to learn more about this action, or if you have any questions concerning this announcement or your rights or interests with respect to these matters, please contact us.
Charles Linehan, Esq.,
Glancy Prongay Wolke & Rotter LLP,
1925 Century Park East, Suite 2100,
Los Angeles California 90067
Email: [email protected]
Telephone: 310-201-9150 (Toll-Free: 888-773-9224)
Visit our website at www.glancylaw.com.
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If you inquire by email, please include your mailing address, telephone number and number of shares purchased.
To be a member of the class action 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.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
Contact Us:
Glancy Prongay Wolke & Rotter LLP,
1925 Century Park East, Suite 2100,
Los Angeles, CA 90067
Charles Linehan
Email: [email protected]
Telephone: 310-201-9150
Toll-Free: 888-773-9224
Visit our website at: www.glancylaw.com.
by Todd Bishop on Jul 2, 2026 at 9:03 amJuly 2, 2026 at 9:03 am
As the country marks its 250th birthday this week, Microsoft is rolling out an unlikely summer project: a six-part series of short videos, hosted by Microsoft President and Vice Chair Brad Smith, that look to American history for lessons relevant to technology and innovation today.
The premise is that every technology debate of the moment — over such issues as patents, privacy, and who gets to shape AI — has a precedent somewhere in the country’s past, and that we’d all benefit from remembering how we got here in the first place.
“We felt that the 250th anniversary of the country deserved some added reflection about the lessons of history, the role of technology, and the questions that we’re facing as a country,” explained Smith, a well-known history buff, in an interview with GeekWire this week.
In the first episode, for example, he stands in Philadelphia’s Independence Square to explain how a steamboat demonstration on the Delaware River in 1787 helped inspire the Constitutional Convention to give Congress the power to grant patents. This was the basis for the intellectual property framework that Smith describes as a bedrock of American innovation.
Savvy viewers may see some irony in a company extolling the virtues of IP protections even as Microsoft and OpenAI defend themselves against a New York Times copyright suit over the material used to train their AI models.
Asked about that, Smith made it clear he doesn’t see a contradiction.
“Every generation of technology has required a new round of legal thinking, legislation and oftentimes lawsuits, so that courts can sustain the balance that has always been needed between new innovation and the protection of things created already,” he said.
He also noted that Microsoft is often the party going to court to protect customers, pointing as one example to the company’s move this week to intervene before Europe’s top court in defense of the European Union and U.S. data-protection framework.
The six-part series was overseen by Smith’s longtime chief of staff, Carol Ann Browne, a Microsoft vice president; and produced by Kirkland, Wash.-based Trifilm. The episodes, around 3 or 4 minutes each, will roll out in the coming weeks. Smith said they recorded during existing travel plans, working the shoots into stops on trips he was already taking.
The series travels next to a Boston courtroom for the birth of privacy rights, Henry Ford’s Detroit assembly line for the spread of new technology, Cincinnati for Tocqueville’s take on nonprofits, Great Falls, Md., for George Washington’s early infrastructure ambitions, and the Lewis and Clark expedition in Montana for the value of uniting competing viewpoints.
“The 250th anniversary of the country is quite rightly an occasion to honor the past, celebrate the past,” Smith said, explaining the motivation for the series. “But let’s make sure we get something out of the past that helps us be more successful in the future.”
Certified Integration Delivers High-Assurance, Privacy-Preserving Identity Verification at Scale Across the Microsoft Ecosystem
DENVER, CO, July 02, 2026 (GLOBE NEWSWIRE) -- authID® (Nasdaq: AUID), a leading provider of biometric identity verification and authentication solutions, today announced its inclusion in the Microsoft Entra Verified ID partner ecosystem as an Entra Verified ID Identity Verification (IDV) Partner. This milestone expands authID’s potential reach across the global Microsoft customer base and strengthens its partnership momentum with MajorKey Technologies, an Elite Microsoft Partner.
Microsoft Entra is the identity and access management platform used by hundreds of thousands of enterprises worldwide. Certification means that authID’s solution has been rigorously vetted by Microsoft for security, interoperability, and compliance standards, entailing instant credibility with enterprise buyers already leveraging the Microsoft ecosystem. authID sees the potential for strong pipeline growth from being part of that ecosystem, as it allows them to easily deliver their IDV solution to the majority of global enterprise customers.
Through Microsoft Entra Verified ID, organizations can issue verifiable credentials to enable secure, privacy-first digital interactions across workforce, customer, and partner ecosystems. By integrating authID’s biometric identity verification capabilities, enterprises can validate that a digital identity is tied to a real, present individual, defending against deepfakes while eliminating the reliance on passwords, knowledge-based verification, easily spoofed credentials, or commonly stolen or compromised devices.
Microsoft-certified solutions integrate directly with Entra's identity workflows, including Conditional Access policies, verified ID credentials, and external authentication providers. This means customers can incorporate authID into their existing identity stack without custom development or security exceptions.
“I am very proud of our team for their efforts in achieving this milestone,” said Rhon Daguro, CEO of authID. “Microsoft certification does not come quickly or easily, so we put in the preparation and effort needed over time to make this happen. We also appreciate the guidance of our partner MajorKey, a principal player in the Microsoft arena.”
Addressing the Expanding Digital Identity Ecosystem
The certification comes at a critical time for enterprise security and digital onboarding. The growth of identities managed by Microsoft coincides with a global surge in fraudulent identities and identity-based attacks fueled by AI and deepfake technology:
Microsoft Entra services over 800,000 organizations globally, supporting over 1 billion monthly active users, and processing over 8 billion authentications daily.At the same time, reported losses from job scam fraud jumped from $90 million in 2020 to over $501 million in 2024, a 457% increase in four years, according to the FTC. Gartner projects that one in four candidate profiles globally could be fraudulent by 2028, underscoring the accelerating scale of AI-driven identity fraud targeting enterprise hiring and onboarding workflows. As enterprises accelerate digital transformation and remote work initiatives, identity verification has become a foundational requirement across hiring, onboarding, account recovery, and privileged access workflows, especially when leveraging the Microsoft identity platform.
Expanding authID’s Reach Across the Microsoft Ecosystem
authID’s inclusion as an IDV partner significantly broadens its addressable market by enabling access to the growing base of Microsoft Entra customers deploying Zero Trust architectures. Achieving certification required meeting strict technical and security requirements, while providing pre-built trust with IT decision-makers, procurement officers, and compliance reviewers. It can also serve as an important competitive differentiator in enterprise RFPs as the list of certified vendors is small and limited.
With the addition of Microsoft Entra Verified ID support, authID is doubling down on its channel-first strategy. MajorKey Technologies is bringing authID-powered identity verification to enterprise customers through its Microsoft Entra-focused solutions and services and IDProof+ solution, built around authID Proof™. This partnership enables authID to scale through Microsoft’s ecosystem of global system integrators, resellers, and enterprise customers, creating a repeatable, partner-led revenue model.
authID’s technology uniquely combines high-assurance biometric verification with a privacy-first architecture:
Sub-second identity verification with industry-leading accuracy Zero biometric data storage, reducing enterprise liability and regulatory exposure Liveness detection and deepfake protection to ensure the real user is presentSeamless integration with Microsoft Entra Verified ID APIs and credential flows By combining authID Proof™ with Microsoft’s decentralized identity platform, organizations can establish trust at every digital interaction while preserving user privacy.
“Identity has become the new security perimeter, and verifying the real person behind every digital interaction is mission-critical,” added Daguro. “Our inclusion in the Microsoft Entra Verified ID ecosystem, a designation not shared by many of our competitors, allows us to bring high-assurance, privacy-preserving identity verification to enterprises at scale, while accelerating our partner-led growth with Microsoft-focused system integrators.”
About authID
authID (Nasdaq: AUID) ensures enterprises “Know Who's Behind the Device™” for every customer or employee login and transaction through its easy-to-integrate, patented, biometric identity platform. authID quickly and accurately verifies a user's identity, leveraging a 1-in-1-billion False Positive Rate for the highest level of assurance, coupled with industry-leading speed and privacy-preserving technology. Our IDX platform secures the distributed workforce of employees and contractors, while enforcing authorization and accountability for AI agents. By creating a biometric root of trust for each user, authID stops fraud at onboarding, prevents account takeover, detects and stops deepfakes, eliminates password risks and costs, and provides the fastest, frictionless, and most accurate user identity experience in the industry.
For more information, visit www.authID.ai or
https://developer.authid.ai/docs/proof-and-entra-verified-id.
This year is now halfway over, and the market has taken investors on quite the roller coaster ride. 2026 started off flat, declined at the end of March, saw a major rally through June, and then gave up some of its gains to end it. Overall, the S&P 500 is still up 8%, which is a pretty good start to the year, especially considering that its long-term annualized gain is about 10%.
But not all stocks have participated. There are several that either have lost money or haven't risen nearly as much as the data indicates they should have. These stocks are the ones I'm eyeing in July, and I've got three that I think are due for a major rally.
Image source: Getty Images.
Microsoft We'll start with Microsoft (MSFT +1.22%). Its stock has declined more than 20% so far in 2026 -- not the start any investor wants. This performance comes on the back of a rough end to 2025, and Microsoft is well off the all-time high it established last year.
The selling pressure with Microsoft has been intense, and now the stock is down about 30% from its all-time high. In the past decade, that happened only once: at the start of 2023, when the market was convinced that the country was heading into a recession. So that gives you a sense of the bearish sentiment surrounding Microsoft's stock right now.
Today's Change
(
1.22
%) $
4.70
Current Price
$
388.98
This sentiment may also be unjustified, as Microsoft is doing well as a business, with revenue rising 18% and diluted earnings per share (EPS) increasing 23% during its last quarter. Microsoft's AI strategy appears to be working as well, as its annual recurring run rate for its AI business topped $37 billion and was growing at a 123% year-over-year pace.
To top things off, Microsoft trades at 19 times projected earnings for fiscal 2027 (which began July 1). That's a dirt cheap price for a top-notch company.
Today's Change
(
-3.62
%) $
-22.17
Current Price
$
590.74
Meta Platforms Meta Platforms (META 3.62%) has had a similarly rough year and is down nearly 20% from its all-time high. This negative stock sentiment is mostly coming from its AI strategy, which doesn't appear to be panning out at the moment. While it has made some improvements to its advertising platform that spans its social media properties -- Facebook, Instagram, Threads, and WhatsApp -- the market isn't impressed.
Even though Meta's revenue grew at a 33% pace during Q1, it still isn't good enough for the market, and the stock is valued at a relatively low level.
META PE Ratio (Forward) data by YCharts
At 17 times forward earnings, Meta's stock is well off the average valuation of a big tech stock and also trading at a deep discount to the broader market. The S&P 500 trades for 21.5 times forward earnings, so this point marks a major discount. I think Meta is also due for a rally, and buying shares now would allow you to participate in it.
Today's Change
(
0.74
%) $
1.47
Current Price
$
199.05
Nvidia Although Nvidia (NASDAQ: NVDA) hasn't lost money for investors in 2026, it isn't enjoying the success investors are used to seeing. It's up only about 3%, but I think its stock is acting like a coiled spring waiting to explode.
It all boils down to a simple fact: The AI data center build-out is far from over. Nvidia is a critical part of that trend, as it supplies the computing units to many AI hyperscalers. Nvidia has informed investors that it expects AI hyperscaler capital expenditures to top $1 trillion next year, up from $650 billion this year. If that's true, then there's a lot more growth ahead for Nvidia, but none of that is priced into the stock.
NVDA PE Ratio (Forward 1y) data by YCharts
Nvidia's shares trade for 21.5 times forward earnings, the same price as the S&P 500. However, when next year's earnings are used, the number tumbles to a mere 15 times earnings. That's a huge bargain for a stock that's telling investors big growth is coming next year, making it a no-brainer buy now.
Microsoft is investing $2.5 billion into a new group focused on assisting clients with AI implementations, becoming the latest tech company to commit hefty resources to helping businesses understand and adopt emerging artificial intelligence technologies.
With the new venture, called Microsoft Frontier Co., the software vendor said Thursday that 6,000 employees will be embedded with clients, in a practice that's become known as forward deployed engineering. The division will contain existing Microsoft FDEs, technical consultants, support staffers and salespeople with experience in specific industries. Rodrigo Kede Lima, who's been leading Microsoft's Asia business, will be its president.
The announcement comes two days after cloud rival Amazon said it was putting $1 billion behind an FDE initiative to support fast-paced AI engagements. Leading AI labs Anthropic and OpenAI both established FDE groups in May, partnering with private equity firms, banks and consulting firms.
Alongside its technology peers, Microsoft has sunk tens of billions of dollars into building data centers that run generative AI models. Microsoft has also released a variety of AI services, with mixed results. The Microsoft 365 Copilot AI assistant has yet to gain anything approaching ubiquity in the business world, and the GitHub Copilot coding agent has ceded market share to newer players.
Microsoft's stock has slumped 21% this year, by far the worst performance among the mega-cap tech companies. One concern on Wall Street is that AI models that quickly compose code might threaten mature software companies.
Judson Althoff, CEO of Microsoft's commercial business, said the FDE effort stems from the realization that "customers are in very different places right now, and trying to really figure out AI."
"Do they snap to one model from OpenAI or one model from Anthropic, or a family of models?" Althoff said in an interview. "Do they take it from a technology first mindset? How do they look at their existing business processes and operations?"
Althoff credits data analytics software vendor Palantir with popularizing the FDE job title. The U.S. military, which keeps forward deployed forces abroad, has long relied on Palantir software, and the company sent FDEs to U.S. bases in Afghanistan, according to the prospectus for its 2020 direct listing.
Earlier this year, Accenture and EY both touted plans to ally with Microsoft on AI-centric FDE programs.
Relative to Palantir, Microsoft supports "more models, we support more connectors to data, more integrations with open systems of record," Althoff said.
Microsoft has for years provided support and implementation services to customers. The company generated about $2.1 billion in revenue from enterprise and partner services in the March quarter, up 2.5% from a year earlier.
Althoff said the company has had the most success when it takes a "very methodical approach towards working with customers to build out an intelligence platform" that protects their intellectual property and allows them to take advantage of "any model in the ecosystem."
A view shows a Microsoft logo at Microsoft offices in Issy-les-Moulineaux near Paris, France, March 25, 2024. REUTERS/Gonzalo Fuentes/File Photo Purchase Licensing Rights, opens new tab
SAN FRANCISCO, July 2 (Reuters) - Microsoft (MSFT.O), opens new tab said on Thursday it is creating a new company that will help customers select AI technologies that work for their businesses and generate returns on their investment.
Microsoft Frontier Company, as the new operating entity is called, will kick off with $2.5 billion in funding from the tech giant to work with clients such as Unilever and Novo Nordisk.
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Large corporations are relying less on renting out AI from a single provider, such as Anthropic or OpenAI, and are instead using a mix of technologies, including open-source models, tailoring them to their needs. This is a costly affair and stretches the time it takes to generate a return on their investment.
Microsoft Frontier Company will offer customers help to select and integrate AI tools - from Microsoft and outside - with that customer's unique internal data. Critically, the customers will get to keep the results of that work rather than send it back to Microsoft.
The Windows operating system maker joins the likes of Palantir Technologies (PLTR.O), opens new tab, which is already using Nvidia's open-source models for such work with large customers, and cloud rival Amazon Web Services (AMZN.O), opens new tab, which kicked off a $1 billion embedded-engineer unit of its own.
Patrick Moorhead, CEO of analyst firm Moor Insights & Strategy, said large businesses suspect that using models from Anthropic and OpenAI will eventually grant these frontier labs expertise to compete with them, especially in fields such as coding and law.
Microsoft partly owns ChatGPT-maker OpenAI and had added Anthropic's models to its Copilot AI assistant earlier this year, partly in response to booming enterprise demand for the AI lab's offerings.
Judson Althoff, CEO of Microsoft Commercial Business, said the new firm was born partly out of Microsoft's own experience when models such as China's DeepSeek and Google's Gemini began to catch up to OpenAI.
"Three years ago, when we built Copilot, we made a mistake by binding it to OpenAI models only," Althoff told Reuters. "You wanted models to amplify your intelligence and be able to have that sort of swappability for state-of-the-art and fine-tuning."
The combination of data and the models mattered more to the customer than any particular model, and they needed the flexibility to switch among AI models quickly, he said.
Reporting by Stephen Nellis in San Francisco; Editing by Harikrishnan Nair
Our Standards: The Thomson Reuters Trust Principles., opens new tab
Satya Nadella says the industry shouldn’t “cede value to a few models that eat everything they see.” (GeekWire File Photo / Kevin Lisota) Microsoft is launching a new AI “company.” It won’t be a separate legal entity, and most of its 6,000 people already work at Microsoft. But the $2.5 billion behind it is real, and the stakes are big, given how many of its AI partners and rivals are racing to do basically the same thing.
The tech giant on Thursday announced “The Microsoft Frontier Company,” which will embed engineers inside customers to build and run AI systems. It will be led by Rodrigo Kede Lima, a longtime Microsoft sales and enterprise leader, most recently president of Microsoft Asia.
This practice is known in the industry as forward-deployed engineering, in which a company sends its own technical employees to work inside a customer’s operations to design, build, deploy and operate AI systems on-site rather than selling a tool and walking away.
The model was pioneered two decades ago by Palantir, but in recent months the approach has become the hot new thing in enterprise AI. Amazon committed $1 billion to its own forward-deployed engineering initiative just two days ago. (Some inside Microsoft suspect that its rival may have caught wind of what it was planning and moved to announce first.)
Anthropic and OpenAI launched rival ventures in May to put engineers inside enterprise customers. Unlike Microsoft’s initiative, the OpenAI Deployment Company, as the ChatGPT maker’s venture is known, is an actual standalone entity — majority-owned by OpenAI but backed by more than $4 billion from a partnership led by the private-equity firm TPG.
Similarly, Anthropic teamed with Goldman Sachs, Blackstone and Hellman & Friedman on a $1.5 billion venture — not yet named — to embed engineers inside mid-sized companies, starting with the investment firms’ own portfolio businesses.
Microsoft is attempting to one-up them all.
“This goes beyond what has been labeled as Forward Deployed Engineering (FDE) and will be the largest, most capable, outcome-driven engineering organization in the industry,” wrote Judson Althoff, CEO of Microsoft’s commercial business, in a post announcing the new initiative Thursday morning.
Responding to questions from GeekWire, a Microsoft spokesperson called the new initiative “a purpose-built company with its own leadership and financial accountability” but stopped short of calling it a separate legal entity or standalone company.
The spokesperson said the organization “brings together more than 6,000 industry, engineering and AI professionals, drawn primarily from Microsoft’s existing engineering and forward-deployed teams,” noting that it will “grow through a combination of internal talent and external hiring across engineering, AI, and industry roles.”
Separately, some consulting roles are among those expected to be impacted by the round of layoffs anticipated next week.
Microsoft wouldn’t say whether the $2.5 billion is new spending or repurposed from existing budgets, or over what period it’s being spent. The company also hasn’t yet spelled out what the new organization means for the future of its existing consulting and services units.
Across the industry, this is happening now because the payoff from AI has proven harder to capture than many companies expected. Businesses across the economy have adopted tools like ChatGPT, Claude, Gemini and Copilot, only to find that impressive demos don’t automatically translate into results. The technology is powerful, but deploying it can be difficult inside a real company, with its own data, rules and entrenched ways of working.
So the AI providers have started sending their own engineers to work inside those companies, figuring out where the AI can actually help, then building it into their operations.
“Having the model alone doesn’t change your workflows or how you operate,” said Marc Nachmann, Goldman Sachs’ global head of asset and wealth management, in an interview with CNBC about the Anthropic partnership. “You need people who can combine the technology with what’s actually happening in the business and implement those changes.”
The big AI providers have multiple reasons to do this. Each of them wants to get more businesses using its AI platform at higher volumes. All of them are looking to drive long-term demand for the AI capacity they’re collectively spending hundreds of billions of dollars to build.
Another big reason: AI models are becoming commodities, getting cheaper and more similar by the month. The big money for the likes of Microsoft is in selling the services needed to make AI pay off inside a company, which is a far bigger market than just selling the models themselves.
Microsoft is pitching privacy and trust as a selling point. Its promise is that a customer’s data and hard-won knowledge stay the customer’s alone. Microsoft says it won’t feed them into training its AI models in ways that would hand the same advantages to the customer’s rivals.
It’s also promising choice: customers can run whichever AI model fits the job, from OpenAI, Anthropic, Microsoft, or open-source providers, not locked into using one.
Microsoft CEO Satya Nadella has argued that a company should be able to exchange one AI model for another without losing all the institutional knowledge it has built up.
That’s his test, as he put it, for whether a business still controls its own future.
“The last thing any of us want is a world where every company across every sector is ceding value to a few models that eat everything they see,” Nadella wrote in a June 14 essay. “If all the value is accrued by only a few models, the political economy will simply not tolerate it. There is no societal permission for an AI future that hollows out entire industries.”
Whether that vision of swappable AI models becomes a reality remains to be seen. There’s actually a risk for customers that the opposite will happen in the forward deployed engineering approach. Even if they can theoretically swap in a competitor’s AI model, working with Microsoft’s engineers means their systems naturally end up running on Microsoft’s cloud platform and related technologies, making it very difficult to jump ship.
It’s also not clear how new all of this really is for the company. Microsoft already runs a large in-house delivery arm — Industry Solutions Delivery, the group that absorbed what used to be called Microsoft Consulting Services — with thousands of consultants and engineers building and deploying technology inside customer organizations.
Microsoft also has programs like FastTrack to help customers roll out its software, and over the past year it has been rolling out “forward-deployed engineering” teams with partners, including a dedicated practice with Accenture and a $1 billion, five-year alliance with EY.
So ultimately the Microsoft Frontier Company is less a new company than a new push behind work the actual company was already doing, albeit bigger and better-branded than before.
Image Credits:Aleksander Kalka/NurPhoto / Getty Images 6:53 AM PDT · July 2, 2026
On Thursday, Microsoft announced a new operating business called Microsoft Frontier company, focused on delivering successful enterprise AI deployments with Microsoft’s existing AI tools. The project will be backed by a $2.5 billion investment from Microsoft, as well as 6,000 industry and engineering experts.
In a statement announcing the venture, Microsoft’s Commercial Business CEO Judson Althoff resisted the Forward Deployed Engineer (FDE) label that is often applied to these ventures. “This goes beyond what has been labeled as Forward-Deployed Engineering,” Althoff wrote, “and will be the largest, most capable, outcome-driven engineering organization in the industry.”
Nonetheless, the venture bears a striking similarity to a number of FDE-based AI ventures announced in recent months. Just two days earlier, Amazon Web Services announced an internal commitment of $1 billlion for its own AI deployment venture, explicitly embracing the FDE model. Both OpenAI and Anthropic have launched joint ventures along similar lines, although those efforts also involve outside capital from private equity firms.
Microsoft’s existing client base will give the new effort a significant head start, as the company has already deployed engineers to much of the Fortune 500. The announcement cites an early partnership with the London Stock Exchange Group, as well as Unilever, Land O’Lakes, and Accenture.
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Russell Brandom has been covering the tech industry since 2012, with a focus on platform policy and emerging technologies. He previously worked at The Verge and Rest of World, and has written for Wired, The Awl and MIT’s Technology Review. He can be reached at [email protected] or on Signal at 412-401-5489.
Venu Krishna went on CNBC’s Closing Bell Overtime on June 30 and argued that the money fleeing Big Tech is running the wrong direction. His pitch: a PEG ratio below 1 for the Mag 7 excluding Tesla, roughly 30% earnings growth in Q1, and multiples that have already been marked down. “Everybody, when they think about rotation, is moving away from them. And those are precisely the areas which we continue to like.”
Krishna’s team lifted its S&P 500 target to 7,800, built on 21% earnings growth this year decelerating to 15-16% next year, with multiples deliberately cut 5-10% across buckets. He is calling the Big Tech setup “fantastic” because you have earnings compounding fast while the multiple has taken a four-handle haircut. For chip stocks, he sees 18 months of earnings visibility from hyperscaler spending with “no sign of reducing,” projecting hyperscaler capex reaching $1.2 trillion in 2028, roughly $250 billion above consensus.
Where the “under 1” math actually lives The argument lands hardest at Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction), which trades at a P/E of 16x after Q1 revenue of $109.9 billion (+21.8% YoY) and Google Cloud growth of 63% with backlog nearly doubling quarter-over-quarter to over $460 billion, per the company’s Q1 2026 earnings release. That is a growth stock at industrial prices.
Meta Platforms (NASDAQ:META) sits at a P/E of 20x with Q1 revenue growth of 33.1%. Microsoft (NASDAQ:MSFT) is at 27x with an AI run rate that hit $37 billion, up 123% year-over-year. Amazon (NASDAQ:AMZN) is at 33x with AWS growing 28%, its fastest in 15 quarters. Apple (NASDAQ:AAPL) is the outlier at 38x on 16.6% revenue growth, which is why the PEG story looks better without it. And NVIDIA is the chip half of Krishna’s thesis, with Q1 FY27 revenue up 85.2% and Data Center revenue of $75.25 billion, +92%.
Then look at what the tape has done. Microsoft is down 22.53% year-to-date and 17.15% over the last month. Meta is down 14.52% YTD. Amazon shed 11.93% in the past month. Meanwhile the Invesco QQQ Trust is up 19.87% YTD. The dispersion is the whole point. Money has crowded into the chip side while selling the platforms that fund the chip side.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.
The rate risk that could kill the trade Krishna flags rates as the primary equity risk, because AI capex is itself feeding inflation through higher memory, server, and storage costs. That makes Fed cuts unlikely. His base case: no hikes this year, potentially one next year. The 10-year Treasury yield sits at 4.38%, in the 76th percentile of the last 12 months, and Core PCE is running in the 90.9th percentile of its trailing year. Higher discount rates compress the value of distant AI earnings, which is why the “fantastic” setup only stays fantastic if rates behave.
The capex numbers back Krishna’s chip case. Microsoft’s quarterly capex hit $30.88 billion (+84%), Alphabet’s $35.67 billion (+107%), and Meta guided full-year capex up to $125-145 billion. Amazon committed roughly 2 gigawatts of Trainium capacity to OpenAI and up to 5 gigawatts to Anthropic. That spend is already contracted.
What the crowd is actually doing The uncomfortable part of Krishna’s call is that you are buying what everyone else is selling. But if hyperscaler capex really is a durable runway, then sellers of Alphabet near 16x earnings and Meta near 20x are handing away growth stocks at cyclical multiples. The rotation trade assumes AI monetization has topped out at the platform layer. Q1 revenue prints across the group make that a hard argument to defend.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.
SummaryMicrosoft's RPO surged 99% year over year to $627 billion, with approximately $157 billion expected to convert into revenue within 12 months.AI monetization extends beyond inference, driving strong growth across Cosmos DB, OneLake, Azure infrastructure, storage, compliance, and enterprise data services.AI ARR reached $37 billion, up 123% year over year, while Azure is guided to deliver approximately 40% constant-currency growth next quarter.Microsoft's multi-model AI strategy and Maia/Cobalt silicon should reduce inference costs, supporting long-term margin expansion despite elevated infrastructure investments.Risks include a projected $190 billion FY26 CapEx program, declining cloud gross margins, regulatory scrutiny, and increasing competition following OpenAI's reduced exclusivity. tupungato/iStock Editorial via Getty Images
Investment Thesis Microsoft's (MSFT) narrative has changed dramatically over the last few quarters. The question now is not whether Microsoft can monetize AI but how much monetization has been locked in already. MSFT is
17.13K Followers
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New York, New York--(Newsfile Corp. - July 1, 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 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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A view shows a Microsoft logo at Microsoft offices in Issy-les-Moulineaux near Paris, France, March 25, 2024. REUTERS/Gonzalo Fuentes/File Photo Purchase Licensing Rights, opens new tab
July 2 (Reuters) - A consortium including Microsoft (MSFT.O), opens new tab and telecom startup Lightstorm plans to build a new undersea cable linking India with Malaysia and Singapore as technology firms compete to expand AI and cloud infrastructure in India, one of the world's fastest-growing data markets.
The consortium, whose other members include Tata Communications (TATA.NS), opens new tab, Singapore Telecommunications (STEL.SI), opens new tab, Singapore's ASEAN Cableship and Japan's NEC Corporation, will construct the I-2SEA cable to support AI, cloud and hyperscale workloads, the companies said on Thursday.
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They did not provide additional details including the investment size.
The network will span 3,600 km and have landing stations in Machilipatnam in the southern Indian state of Andhra Pradesh, where Meta (META.O), opens new tab and Alphabet (GOOGL.O), opens new tab have announced data centers.
The cable is expected to be operational in the fourth quarter of 2029, Lightstorm Group CEO and Managing Director Amajit Gupta told Reuters in an interview.
The I Squared-backed company currently connects 19 AI and cloud zones across India through terrestrial fiber cable networks, with the new network expected to bring this number up to 29, Gupta said.
India's operational data center capacity could double from the current 1.4 gigawatts by 2027, based on projects under construction, and increase five-fold by 2030 if planned projects are fast-tracked, Macquarie Equity Research said in a report last October.
Undersea cables carry roughly 95% of the world's internet traffic. India currently has 17 active submarine cables with a maximum potential capacity of 960 terabits per second, and at least 10 more have been publicly announced, according to TeleGeography, a telecommunications research firm.
Separately, Lightstorm plans to list in India in mid-2027, Gupta said, without disclosing any other details. The company was seeking a valuation of up to $1.5 billion in March, according to a media report, opens new tab.
Reporting by Abhirami G in Bengaluru; editing by Chandini Monnappa and Sonia Cheema
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 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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Microsoft (MSFT +2.95%) stock moved higher in Wednesday's trading as investors shifted their positioning when it came to artificial intelligence stocks. The company's share price closed out the day up 3%. Meanwhile, the S&P 500 fell 0.2%, and the Nasdaq Composite moved 0.7% lower.
Investors moved out of AI chip stocks today and bought back into artificial intelligence software plays. In addition to that positive catalyst, Microsoft also scored a new long-term deal.
Image source: Getty Images.
Microsoft is seeing bullish momentum as AI software regains favor While AI chip stocks have enjoyed very strong bullish momentum this year, many leading artificial intelligence software providers have had a rougher go of things. It's possible that the dynamic is in the early stages of shifting.
It's still too early to proclaim that a sustained rotation back into AI software stocks is underway, but trading over the last week has seen top chip stocks give up some ground and investment capital flow into leading software names. Even with the benefit of some recent bullish momentum, Microsoft stock is still down roughly 20.5% year to date -- and sustained recovery for the broader software space could power more big gains for the stock.
Today's Change
(
2.95
%) $
11.01
Current Price
$
384.03
Microsoft just landed another big long-term deal Haleon announced today that it had entered into a new partnership with Microsoft to expand AI and analytics capabilities across its business. The five-year deal sees Haleon expanding its integration of Microsoft 365 Copilot and other tools. Microsoft stock has seen some pullbacks this year due to concerns about Copilot's competitive positioning compared to rival offerings from Anthropic, OpenAI, and other AI leaders, but the company has been landing deals for the service recently that reinforce how strong its position remains in the enterprise software market.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends Haleon Plc. The Motley Fool has a disclosure policy.
BENSALEM, Pa., July 01, 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.
Black Rock Coffee Bar, Inc. (NASDAQ: BRCB)
Class Period: September 12, 2025 – May 12, 2026
Lead Plaintiff Deadline: August 17, 2026
The complaint alleges that throughout the Class Period the defendants made false and/or misleading statements and/or failed to disclose: (1) Black Rock Coffee’s new store openings were leading to a cannibalization of its existing services and revenue; (2) Black Rock Coffee overstated the manner in which its expansion strategy was tailored to avoid “sales transfer”; (3) as a result of “sales transfer,” the Company’s financial results were materially impacted; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
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.
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