A photo taken on May 7, 2026 shows the letters AI for Artificial Intelligence on a laptop screen (top) next to the logo of the Microsoft's Copilot chatbot application on a smartphone screen in Frankfurt am Main, western Germany. (Photo by Kirill KUDRYAVTSEV / AFP via Getty Images)
AFP via Getty Images
This article was written by Doug Nathman, with research by his team at Trefis.
If you own Microsoft stock, the options market indicates you are already bearing exposure to a remarkably broad range of potential outcomes over the next year.
The options market is reflecting two distinctly different futures for Microsoft (MSFT). In one scenario, the stock's value concludes the upcoming year around $240. In another scenario, it approaches $509. If you own the stock, you are subject to the risk of the entire spectrum, a subtle volatility integrated into a stock that, on any given day, might not appear particularly tumultuous.
This isn’t a forecast. It’s a price point. The options market offers one analytical framework for evaluating market-implied risk and currently assigns an implied volatility of 37.1% for Microsoft over the next year. This figure corresponds directly to a broad 68% probability range, spanning a floor approximately 32.0% below today’s price and a ceiling roughly 44.4% above it. You face that complete, two-sided fluctuation.
Why The Market Is Assessing More Risk Than UsualThe 37.1% volatility statistic is not standard practice. It’s currently at 1.41 times the stock’s actual, observed volatility of 26.3% over the past year. Simply put, the market is factoring in considerably greater uncertainty than the stock has historically exhibited. This isn’t merely noise; it’s a valuation on a very defined and unresolved discourse concerning the company’s future.
The $190 Billion Question Fueling This UncertaintyThe root of this tension is evident from the company’s own strategies. On one hand, there is rapid expansion. Management recently pointed out that its “AI business exceeded $37 billion in ARR, an increase of 123%,” and that Microsoft Cloud revenue surpassed $54 billion, reflecting a 29% increase year-over-year. The company now boasts “over 20 million Microsoft 365 Copilot paid seats.” This narrative has the potential to propel the stock toward the upper end of that price range. In a brief aside regarding sentiment, options traders are presently paying more for upside calls than for downside puts.
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However, that growth incurs a hefty cost. The other side of the discussion pertains to the capital needed to support it. Management mentioned in its latest call that for the calendar year 2026, “we anticipate investing approximately $190 billion in capital expenditures.” This figure has created what one analyst referred to as a “disconnect that makes investors a bit anxious regarding the speed at which they observe CapEx growing relative to revenue growth.” The fundamental query is whether the returns from AI can justify such an expenditure level, especially when, as another analyst noted, “overall IT spending expectations are not increasing.”
Determining Your Investment For A Two-Sided ScenarioYou cannot dictate which of these influences, the rapid growth or the significant costs, will more greatly affect the stock price. What you can manage is your exposure to this uncertainty. A stock exhibiting this level of implied volatility necessitates disciplined portfolio management, not mere prediction. It highlights the significance of position sizing and diversification.
For shareholders, the critical aspect to observe is how the revenue growth narrative unfolds in relation to capital expenditures. Management has indicated that they “expect another year of double-digit revenue and operating income growth in FY '27.” Whether the company can fulfill that promise, and the degree of profitability, will be the decisive factor that clarifies the broad uncertainty presently incorporated into your shares.
A disciplined, diversified approach is designed to address precisely that concern. The Trefis High Quality (HQ) Portfoliocombines the potential of robust enterprises with the stability provided by a 30-stock portfolio, sized and re-balanced with precision, and has outperformed a benchmark that aggregates the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. Augmenting a concentrated holding in this manner allows you to maintain compounding while mitigating the fluctuations that could disrupt long-term strategies.
Microsoft (NASDAQ:MSFT | MSFT Price Prediction) is the stock every cloud bull and AI evangelist keeps pointing at, drawn by an AI business that just crossed a $37 billion annual run rate and Azure growth holding at 40%.
But here’s what you should actually be watching.
The Capex Furnace Nobody Wants to Price Microsoft just spent $30.88 billion on capital expenditures in a single quarter, up 84.39% year over year. Full-year FY25 capex hit $64.55 billion, versus $20.62 billion in FY21. Capex now consumes 47.4% of operating cash flow, up from 26.9% four years ago. And the punchline retirement investors keep missing: free cash flow actually declined 3.32% in FY25 while revenue grew.
The stock has already begun to flinch. Shares are down 24.42% over the past year and 22.54% year to date. Even the retail crowd is catching the scent: an r/wallstreetbets post titled “Satya and Zuckerberg are incinerating capital” cleared 1,061 upvotes. Meanwhile, OpenAI investment losses ballooned to $3.1 billion in Q1 FY26 versus $523 million a year earlier, even as Microsoft pledged a $250 billion Azure backstop tied to the same partner. At 27x earnings and 39x free cash flow, that’s a steep multiple to pay for an arms race with rising tuition.
The Asset-Light Fortress: Why Apple Wins This Cycle Apple (NASDAQ:AAPL) is running the opposite playbook, and the scoreboard agrees. Shares are up 41.75% over the past year while Microsoft melted. Three reasons the gap widens from here.
1. Asset-light beats capex-heavy. Apple’s Q1 FY26 capex was $2.37 billion, down 19.29% YoY, against operating cash flow of $53.93 billion. That’s a 4.4% capex-to-OCF ratio. Microsoft’s ratio is closing in on 50%. Apple’s customers refresh phones. Microsoft has to refresh data centers.
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.
2. Capital returns are a tidal wave. Apple’s board authorized a fresh $100 billion buyback and raised the dividend 4% in Q2 FY26. FY25 repurchases hit $90.71 billion. Microsoft returned $12.7 billion in dividends and buybacks in Q2 FY26 combined. One company is shrinking the float aggressively; the other is funding silicon.
3. The Services flywheel keeps compounding. Services hit an all-time record $30.98 billion in Q2 FY26, against $26.64 billion a year prior, riding an installed base of more than 2.5 billion active devices. Return on equity sits at 141.5% with ROIC of 53.35%. Microsoft’s ROE is 33.28%. Best-in-class capital efficiency is the model.
The latest quarter sealed it. Apple posted $111.18 billion in revenue, up 16.6%, with double-digit growth across every geographic segment and EPS of $2.01, the eighth straight beat. Tim Cook called it “our best March quarter ever.”
The Action Move your attention, and your research bandwidth, off the capex-heavy hyperscaler that headlines are still chasing and onto the cash-returning consumer fortress the headlines have stopped explaining. The relative setup favors Apple’s cash-return model over Microsoft’s capex cycle until the spending math changes.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.
Apple (AAPL, Financials) and Microsoft (MSFT, Financials) are starting to pass higher memory costs on to customers.The reason is the AI boom. Data centers need
NEW YORK, June 29, 2026 (GLOBE NEWSWIRE) -- Leading securities law firm Bleichmar Fonti & Auld LLP announces that a class action lawsuit has been filed against Microsoft Corporation (NASDAQ:MSFT) and certain of the Company’s senior executives for securities fraud after its significant stock drop resulting from potential violations of the federal securities laws.
If you invested in Microsoft, you are encouraged to obtain additional information by visiting: https://www.bfalaw.com/cases/microsoft-class-action-lawsuit.
Key Details of the Microsoft ($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.
Voting Against Short-Term FearsMicrosoft’s stock has faced relentless pressure as investors panic over massive capital expenditures. However, Boloor recently initiated a trade in the “former market darling,” arguing that Wall Street is “significantly overselling” Microsoft.
He attributes the recent sell-off to short-term fears regarding expensive AI infrastructure, GPU spending, and declining free cash flow.
Calling it a classic example of the voting machine versus the weighing machine, Boloor notes investors are punishing the stock today while ignoring the durable earnings power expected by 2027 and 2028.
Unignorable FundamentalsDespite the stock’s dismal year-to-date performance, the company’s core engine is accelerating. Overall revenue grew 18% year-over-year, and earnings per share expanded by 23%—meaning EPS is successfully outpacing revenue growth despite the heavy investments.
Most notably, Microsoft’s cloud segment surpassed $54 billion, with Azure soaring by 40%. Boloor points out that Microsoft possesses “one of the strongest enterprise distribution moats in all of technology.”
Rather than convincing companies to adopt brand new platforms, Microsoft is seamlessly embedding AI into everyday tools like Outlook, Excel, and Teams. This strategy brilliantly shifts the company from merely monetizing users to successfully “monetizing work.”
The Copilot Scale And OpenAI NuanceWhile some consider Copilot adoption disappointing, Boloor notes the platform already boasts over 20 million paid seats. As this scales, it transforms into a highly lucrative revenue layer.
Finally, Boloor addressed the OpenAI concentration risk. While acknowledging the vulnerability, he views the updated partnership as a “huge win” that allows Microsoft to retain vital IP rights through 2032 while redirecting capital toward its own internal AI infrastructure and Azure models.
How Has MSFT Performed In 2026?MSFT shares have plunged 22.88% YTD, up 10.35% over the last month, and 25.02% over the year. The stock closed 5.71% higher at $372.97 apiece on Friday, and it was 1.77% higher in premarket on Monday.
Benzinga’s Edge Stock Rankings indicate that MSFT maintains a weak price trend in the short, long, and medium terms, with a solid quality score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Shutterstock
Market News and Data brought to you by Benzinga APIs
Microsoft (MSFT) was a big mover last session on higher-than-average trading volume. The latest trend in earnings estimate revisions might not help the stock continue moving higher in the near term.
New York, New York--(Newsfile Corp. - June 28, 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.
Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm, on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm/.
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-------------------------------
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/303194
Source: The Rosen Law Firm PA
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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.
Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm, on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm/.
Attorney Advertising. Prior results do not guarantee a similar outcome.
-------------------------------
Contact Information:
Laurence Rosen, Esq.
Phillip Kim, Esq.
The Rosen Law Firm, P.A.
275 Madison Avenue, 40th Floor
New York, NY 10016
Tel: (212) 686-1060
Toll Free: (866) 767-3653
Fax: (212) 202-3827 [email protected]
www.rosenlegal.com
New York, New York--(Newsfile Corp. - June 28, 2026) - Bronstein, Gewirtz & Grossman, LLC, a nationally recognized investor-rights law firm, announces that a class action lawsuit has been filed against Microsoft Corporation (NASDAQ: MSFT) and certain of its officers.
This lawsuit seeks to recover damages against Defendants for alleged violations of the federal securities laws on behalf of all persons and entities that purchased or otherwise acquired Microsoft securities between May 1, 2025 and January 28, 2026, both dates inclusive (the "Class Period"). Such investors are encouraged to join this case by visiting the firm's site: bgandg.com/MSFT.
Microsoft Case Details
The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements because they failed to disclose that:
Microsoft's Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; Microsoft's flagship proprietary AI model ranked well below competitors on a number of benchmark tests; Microsoft needed to increase by billions of dollars its capital expenditures and divert graphics processing unit ("GPU") and central processing unit ("CPU") capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related research and development ("R&D"); and as a result of the above, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and Microsoft's Copilot offerings had lost market share to rival products, a trend that was increasing.What's Next for Microsoft Investors?
A class action lawsuit has already been filed. If you wish to review a copy of the Complaint, you can visit the firm's site: bgandg.com/MSFT, or you may contact Peretz Bronstein, Esq. or his Client Relations Manager, Nathan Miller, of Bronstein, Gewirtz & Grossman, LLC at 917-590-0911. If you suffered a loss in Microsoft you have until August 11, 2026, to request that the Court appoint you as lead plaintiff. Your ability to share in any recovery doesn't require that you serve as lead plaintiff.
No Cost to Microsoft Investors
We, Bronstein, Gewirtz & Grossman LLC, represent investors in class actions on a contingency fee basis. That means we will ask the court to reimburse us for out-of-pocket expenses and attorneys' fees, usually a percentage of the total recovery, only if we are successful.
Why Bronstein, Gewirtz & Grossman, LLC for Microsoft Securities Class Action?
Bronstein, Gewirtz & Grossman, LLC is a nationally recognized firm that represents investors in securities fraud class actions and shareholder derivative suits. Our firm has recovered hundreds of millions of dollars for investors nationwide. More at www.bgandg.com
"Our practice centers on restoring investor capital and ensuring corporate accountability, which serves to uphold the essential integrity of the marketplace," said Peretz Bronstein, Founding Partner of Bronstein, Gewirtz & Grossman, LLC.
Follow us for updates on LinkedIn, X, Facebook, or Instagram.
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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/301524
Source: Bronstein, Gewirtz & Grossman, LLC
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Amazon, Microsoft, and Alphabet's Google have been experiencing strong demand for their artificial intelligence (AI)-focused cloud computing offerings, leading to significant increases in their backlogs and remaining performance obligations (RPO).
The three tech giants, which are members of the Magnificent Seven, were sitting on a combined order backlog of $1.45 trillion in the first quarter of 2026. This clearly indicates an incredible demand for running AI workloads in data centers. However, shares of Amazon, Microsoft, and Alphabet have struggled despite the massive contractual backlogs they carry.
While Amazon and Alphabet have gained 3% and 6% this year, Microsoft's stock has retreated 21%. However, there's another cloud computing company that's witnessed a parabolic jump in its stock price this year. Shares of DigitalOcean (DOCN 4.04%) are up by an incredible 184%.
Let's see why that's the case and check why this high-flying stock isn't done soaring yet.
Image source: The Motley Fool.
DigitalOcean's business model is driving an acceleration in growth Like its larger peers, DigitalOcean provides an on-demand cloud computing platform. However, the key difference in its business model from those of Amazon, Microsoft, and Alphabet is that its offerings are tailored for small and medium businesses, start-ups, and developers. Of course, the three tech giants I am comparing DigitalOcean with account for 62% share of the cloud computing market, but the smaller company is carving out a niche for itself.
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That's because DigitalOcean claims to offer a simple platform with predictable, flat pricing to customers, which is ideal for small and medium-sized companies that want to avoid complexity and keep costs in check while deploying AI solutions. Specifically, DigitalOcean offers 30 core products as compared to the hundreds of offerings available on the cloud computing platforms of its bigger competitors. It offers all its products on a single platform, making it easier to build, deploy, and scale AI applications.
Also, the simplified nature of its cloud offerings means that smaller businesses are likely to get better support and attention. Most importantly, DigitalOcean claims that it can reduce total costs by up to 80% compared with traditional hyperscalers. This probably explains why customers have started spending aggressively on its cloud computing platform, especially for running AI workloads.
The company noted that its AI-focused annual recurring revenue (ARR) in Q1 jumped by 221% year over year to $170 million. That was significantly higher than the 22% increase in its overall ARR to just over $1 billion. More importantly, DigitalOcean customers are not just renting the company's AI hardware but also running inference services on its platform.
Specifically, DigitalOcean's ARR from its inference services increased by a whopping 487% year over year in Q1, accounting for 64% of its AI ARR. The company estimates that AI inference workloads will account for 80% of the computing power in AI data centers in 2030, up from around 50% last year. So, it won't be surprising to see more customers flocking toward DigitalOcean's platform to run inference workloads in the future.
The good news is that DigitalOcean's growing prominence in AI cloud infrastructure is poised to translate into stronger growth for the company, as evidenced by the substantial upgrade to its guidance. DigitalOcean anticipates a 26% increase in revenue in 2026, followed by a significantly stronger jump of more than 50% in 2027. Even better, analysts anticipate its solid momentum will continue beyond next year.
Data by YCharts
But is the stock still worth buying? Investors may be wondering whether buying this AI stock is a good idea after its stunning 2026 rally. After all, DigitalOcean is now trading at almost 16 times sales, well above the tech-laden Nasdaq Composite index's price-to-sales ratio of 5.2.
However, the acceleration in DigitalOcean's growth justifies the premium valuation, especially considering that it is at the beginning of a terrific growth curve. The cloud computing provider can sustain its solid growth beyond the next couple of years, driven by the growing demand for AI inference. Assuming it can clock even 20% revenue growth in 2029 and 2030, DigitalOcean's top line could reach $3.53 billion by the end of the decade.
If the stock trades at even 10 times sales at that time, its market cap could reach $35 billion, implying 141% upside from current levels. So, it isn't too late for investors to buy this growth stock as it still has terrific upside potential.
New York, New York--(Newsfile Corp. - June 27, 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.
Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm, on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm/.
Attorney Advertising. Prior results do not guarantee a similar outcome.
-------------------------------
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/303193
Source: The Rosen Law Firm PA
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Artificial intelligence has turned the stock market into a contest over who will own the infrastructure powering the next decade of computing. Investors have poured hundreds of billions of dollars into AI leaders, pushing many technology stocks to lofty valuations. Yet even after Microsoft‘s (NASDAQ:MSFT | MSFT Price Prediction) stock climbed over the past several years, it’s fallen hard over the past eight months, falling almost 33%.
One of Wall Street’s best-known contrarian investors believes the market is missing the bigger picture. Michael Burry, whose successful bets against the housing bubble were chronicled in The Big Short, has revealed a new long-term wager that suggests he sees Microsoft’s AI opportunity extending well beyond today’s expectations.
Burry’s Leveraged Bet on Microsoft’s Future Rather than purchasing Microsoft shares outright, Burry disclosed that he bought December 2028 LEAP call options with strike prices around $700.
LEAPs — Long-Term Equity AnticiPation Securities — are simply long-dated options. In this case, they give Burry the right to purchase 100 Microsoft shares per contract at $700 any time before the options expire in December 2028. The strike price stands far above Microsoft’s recent trading range of roughly $350 to $373, making the options deeply out of the money today.
Here’s what the bet tells investors:
Trade Detail What It Means Expiration December 2028 Strike price Approximately $700 Current MSFT price About $350-$373 Investment thesis Microsoft could rise well above $700 before expiration Maximum loss Limited to the premium paid Potential upside Large if Microsoft delivers another multi-year rally The options don’t become profitable simply because Microsoft reaches $700. Burry must also recover the premium he paid, meaning his breakeven price is roughly the strike plus that premium. If Microsoft finishes below that level, the options could expire worthless.
To put that into perspective, if Microsoft were trading at $900 in late 2028, each option would carry about $200 per share in intrinsic value before accounting for the purchase price of the contract.
Why Options Instead of Buying the Stock? Burry has said he already views Microsoft around $350 as an attractive entry point. Rather than commit the capital required to purchase shares, he believes these long-dated calls were inexpensive relative to his outlook.
Instead of tying up tens of thousands of dollars buying stock, LEAPs provide leveraged exposure while limiting downside to the premium paid. Granted, leverage cuts both ways. If Microsoft’s shares fail to appreciate enough before expiration, time decay — known as theta — will steadily reduce the options’ value.
The trade also fits Burry’s investing style. He has built his reputation by making concentrated, high-conviction investments when he believes markets have mispriced an opportunity. While he’s often associated with bearish calls, this position is the opposite — a multi-year bullish bet on one of the world’s largest technology companies.
His thesis likely rests on Microsoft’s leadership across several fast-growing businesses, including Azure cloud computing, enterprise software, AI infrastructure, and its partnership with OpenAI.
This Might Not Be an All-In Position One important detail remains unknown: the size of Burry’s investment. Although he publicly disclosed purchasing the December 2028 LEAPs, he did not reveal how many contracts he owns or how much capital he committed. Because Scion Asset Management no longer files regular Form 13F reports with the Securities and Exchange Commission, investors have no independent way to verify the position’s size.
The trade could actually represent a small speculative position or a major portfolio allocation. Without additional disclosure, nobody outside Burry’s firm knows.
This isn’t the first time Burry expressed bullishness about Microsoft. Earlier this year, he revealed he had gone long on the stock, though he also didn’t reveal any details about his trade. Shares traded at much the same price back then as they do today.
Key Takeaway In short, Burry’s Microsoft trade sends a clear message even if the dollar amount remains a mystery. He believes Microsoft is undervalued enough that shares could climb well beyond $700 over the next two and a half years, making long-dated call options an attractive way to express that conviction.
That said, most retail investors should resist copying the trade outright. LEAP options can generate outsized returns, but they also can lose 100% of their value if the underlying stock falls short of expectations. Investors who share Burry’s optimism — but prefer a wider margin for error — may find simply owning Microsoft shares offers a more forgiving way to benefit from the company’s expanding AI, cloud, and enterprise software businesses over the long run.
Earlier this year, Mono Technologies assembled and shipped nearly 1,000 units of its flagship product, a $600 router development kit. Co-founder Tomaž Zaman, who started Mono in 2024, found early traction with networking aficionados, who use the product to speed their internet connections.
Then came the memory crunch, which has driven up the cost to produce practically every electronic device on the planet. Now, Zaman isn't sure what to do, especially for the 1,300 prospective customers who put down a $100 deposit for his next production run.
Mono's cost for 8 gigabytes of a type of DRAM from Micron shot up from $35 when he was first developing the product to $300 today. At his three-person company, Zaman said he hasn't decided if he'll go ahead with a second batch and increase the price by at least one-third, or introduce a new model with 75% less memory.
"Even a router of our class, it's a poor value if you make it at $900, $1,000," Zaman told CNBC in an interview. "But we have to, or we trim it down to the bare minimums."
Zaman's experience is becoming common across the consumer electronics market, from iconic devices like iPads and Xbox consoles to niche products that are barely past the testing phase. Costs are soaring due to a global supply crunch caused by the artificial intelligence boom, which has led chipmakers like Nvidia to suck up ever-increasing amounts of memory for their processors and advanced systems.
But while tech giants like Apple and Microsoft, which both announced price hikes this week, have a hefty cash cushion, supply chain leverage and customers numbering in the millions or billions, a much wider swath of businesses face potentially dire straits. Most consumer electronics companies have little margin to spare and can't confidently raise prices in an economy already grappling with inflationary pressures.
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GoPro, the struggling maker of action cameras, warned this month that it might go out of business after memory costs shot up between 80% and 115% at the end of the first quarter. And shares of speaker maker Sonos are down 23% this year as memory prices pressure margins.
Nabila Popal, an analyst at IDC, described the current situation as an "absolute existential crisis" for companies such as smaller Android phone manufacturers or "local players that are making devices below $100."
"They won't be able to get the memory because memory suppliers are only answering calls of the big players," Popal said.
Pain is Micron's gainThe flip side of the story was also on display this week.
In its quarterly earnings report on Wednesday, Micron said revenue in the latest period more than quadrupled, and its gross margin more than doubled to almost 85% from 39% a year ago. Micron shares jumped 16% on the results and are now up about 800% over the past year, rallying alongside rivals SK Hynix and Samsung.
Micron said the average selling price of its dynamic RAM in the third quarter rose more than 260% from a year ago. Sumit Sadana, Micron's chief business officer, said in an interview that the company has struck long-term supply agreements with consumer-oriented smartphone and PC companies.
"We spend a lot of time thinking about how do we manage the business and the supply and the allocation of these scarce volumes to customers and segments and markets and geographies to ensure that we are being thoughtful, responsible and fair in our approach," Sadana said.
A day after Micron's results, Apple raised prices on a wide range of iPads and Macs, saying in a statement that the company has "never seen a component price increase this much, this quickly." CEO Tim Cook, in a Wall Street Journal interview published last week, said increases were coming, calling the memory situation a "hundred-year flood."
Within hours of Apple's announcement, Microsoft said the price of the Xbox Series S would increase by $100 to about $500. The company said in a blog post that consoles are typically sold for less than they cost to make.
"Console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027," Microsoft said in the post. "The entire consumer electronics industry is struggling with the current components crisis, but the effects are particularly hard on consoles."
Wall Street has its concerns, as both stocks fell this week and are underperforming the broader indexes this year. But panic levels are much higher at companies that lack close ties to component suppliers and are subject to constant cost changes and swings in availability.
Industries ranging from telecommunications and medical devices to retailers are concerned about the price increases, according to a letter from lobbyists sent to the Department of Commerce earlier this month.
GoPro said in its warning to investors that it heard from memory suppliers in April about "planned reductions in the production of the memory used in its products," leading to lower projected sales volumes. The company didn't respond to a request for comment.
Elaine Ferguson, co-founder of W5 Technologies, is wrestling with how to deal with crippling RAM costs and lead times for the communications equipment her company makes for defense contractors.
Earlier this year, W5 placed an order for a server from a major manufacturer to include in a satellite communications simulator that the company planned to deliver in May. Ferguson said the price when she ordered it was $8,839, up from $5,373 in 2020.
Since that purchase, the price has almost doubled.
"We just ordered another one for another sale," Ferguson said. "It is now just under $15,000 and the lead time is anytime we get it, we're lucky to get it."
Instead of getting it in May, Ferguson said she's now not expecting it until August. Ferguson said W5 offered the defense contractor client a used server that's currently being tested and payment to fly her team out for installation.
Meanwhile, at Mono Technologies, Zaman said he's working on development and qualification for the company's next model, though he's not sure when it will come to market. He's also fundraising, hoping to find investors to back a new and larger production run.
"Product manufacturing is very expensive," he said.
Microsoft: Steady Revenue ProgressionMicrosoft (MSFT +6.03%) develops and licenses software, digital services, and cloud computing solutions for global enterprises and consumers.
It recently entered a long-term power agreement with Chevron to support its data centers while facing a class-action lawsuit, and it reported 38% net income margin for the quarter ended March 31, 2026.
Alphabet: Maintaining a Larger Revenue BaseAlphabet (GOOGL 1.73%) provides a diverse range of digital platforms, advertising solutions, and cloud services to global consumers.
The company executed a large equity capital raise and introduced several technological updates at its developer conference. It generated 57% net income margin for the quarter ended March 31, 2026.
Why Revenue Matters for Retail InvestorsRevenue serves as a foundational measure of total money generated by core business operations before deducting expenses. Tracking this metric helps investors measure a company's total customer sales volume and baseline growth trajectory over time.
Quarterly Revenue for Microsoft and AlphabetQuarter (Period End)Microsoft RevenueAlphabet RevenueQ2 2024 (June 2024)$64.7 billion$84.7 billionQ3 2024 (Sept. 2024)$65.6 billion$88.3 billionQ4 2024 (Dec. 2024)$69.6 billion$96.5 billionQ1 2025 (March 2025)$70.1 billion$90.2 billionQ2 2025 (June 2025)$76.4 billion$96.4 billionQ3 2025 (Sept. 2025)$77.7 billion$102.3 billionQ4 2025 (Dec. 2025)$81.3 billion$113.9 billionQ1 2026 (March 2026)$82.9 billion$109.9 billionData source: Company filings. Data as of June 23, 2026.
Foolish TakeMicrosoft and Google parent Alphabet are two of the premier companies worth investing in for those seeking stocks in the technology and artificial intelligence sectors. As the data above reveals, both are enjoying a trend of strong, sustained revenue growth. This suggests their businesses are thriving as AI injects new life into their offerings.
Even so, Microsoft and Alphabet experienced share price declines recently due to the substantial sums they are spending to build up the infrastructure needed to support their AI systems. The situation creates a buy opportunity for investors.
Although purchasing shares in both is ideal, if you have to choose one, my recommendation is Microsoft. Its stock fell to a 52-week low of $349.20 on June 25. As a result, Microsoft’s forward price-to-earnings ratio is 18, below Alphabet’s 24, indicating Microsoft stock is the better value.
In addition, although both pay a dividend, Microsoft's dividend yield is far greater at 1% compared to Alphabet’s tiny 0.26%. This passive income adds to your total return.
Wall Street may be punishing Microsoft shares right now, but the company is doing well as the revenue data above illustrates. For example, sales in its fiscal third quarter, ended March 31, were $82.9 billion, representing strong 18% year-over-year growth. With its trend of rising revenue and a respectable dividend yield, Microsoft is looking like an attractive stock to buy right now.
The artificial intelligence boom has long been pitched as a transformative force that would boost productivity and eventually lower costs across the economy.
But this week, investors were confronted with a less discussed consequence of the AI race: higher prices.
Apple and Microsoft both announced product price increases on Thursday, citing soaring costs for memory and storage technologies that have become increasingly scarce as technology giants pour hundreds of billions of dollars into building AI infrastructure.
The moves reinforced growing concerns that, at least in the short term, AI may prove inflationary rather than disinflationary.
"Apple and Microsoft's price rises have struck at the market's fear of inflation, raising worries that, far from being deflationary, the AI boom might be inflationary, particularly for the hard-pressed consumer, hurting rather than aiding economic growth," Chris Beauchamp, chief market analyst at IG, said.
Apple raised prices on several MacBook and iPad models by between $100 and $300, though it left iPhone prices unchanged.
"The rapid expansion of AI data centers has created an extraordinary surge in demand for memory and storage. We have never seen a component price increase this much, this quickly," Apple said in a statement.
The company added that it had "reached a point where we need to begin raising prices on a number of products," while indicating that additional increases remain possible.
The market reaction was swift. Apple shares tumbled 6%, their worst single-day decline in more than a year.
Microsoft announced similar measures.
The software giant said prices of Xbox consoles would rise globally, with increases of $100 for 512-gigabyte models and $150 for one-terabyte versions effective Aug. 1.
The company also said it would discontinue its two-terabyte Xbox model.
The moves added to a growing list of technology manufacturers raising prices this year.
Dell, HP, Lenovo and Asus have all flagged higher prices, while Samsung increased prices on two variants of its Galaxy S26 smartphones in the United States by $100.
The price increases stem from an unprecedented shortage of memory chips.
Memory and storage components have become critical ingredients in the AI boom as hyperscalers race to build increasingly powerful data centres.
Suppliers have shifted production toward high-bandwidth memory chips used in AI servers, leaving consumer electronics manufacturers scrambling for supplies.
"The four largest US technology companies are forecast to spend $725 billion on data centers and AI equipment in 2026 alone. That level of demand for memory chips has created a shortage the supply chain cannot keep pace with," said James Bull at RSM UK.
Bull said it had become increasingly evident that the costs of building the AI economy were being passed on to consumers and potentially to the broader inflation outlook.
Morgan Stanley analysts warned earlier this month that soaring memory prices could trigger "chipflation" across industries.
The brokerage said memory chip prices had risen six-fold over the past year.
"What began as an AI infrastructure bottleneck is now spreading into hardware margins, device affordability, cloud costs, inflation and policy," the bank wrote in a note.
Some economists believe the inflationary impact of AI extends beyond semiconductors.
According to an April note by JPMorgan Asset Management's Chief Global Strategist David Kelly, the enormous spending wave tied to AI development is likely to be inflationary in the near term rather than deflationary because demand is hitting the economy well before productivity gains materialise.
Kelly acknowledged that rising memory-chip prices are one channel through which AI investment could feed into higher prices, but said they do not yet represent a major source of economy-wide inflation.
Instead, he pointed to other emerging pressures. One of the clearest examples is electricity demand.
"One aspect of this demand is spending on electricity. After more than a decade of no growth, US electricity production rose by 2.5% in 2024, 2.4% in 2025 and was up by 3.0% year-over-year in March of 2026," he said, noting that much of the increase was driven by data centre consumption and the growing use of AI models for training and inference.
Kelly said this likely contributed to a 4.6% year-over-year increase in consumer electricity prices in March.
However, because electricity carries a weight of only about 2.5% in the consumer price index basket, higher power costs accounted for just 0.1 percentage point of March's 3.3% annual rise in headline inflation.
The construction boom linked to AI data centres is also creating labour pressures.
Construction workers saw wages rise 4.3% year-over-year in March, outpacing the 3.5% increase recorded across the broader private sector.
However, Kelly said this acceleration was probably driven more by labour shortages than by AI itself.
The total number of US construction workers increased only 0.7% over the past year, partly reflecting a sharp reversal in immigration trends in a sector that has historically relied heavily on immigrant labour.
Kelly, however, said it was unlikely that most corporations had so far realised significant cost savings from deploying the latest AI models and even less likely that any savings had been passed on to consumers.
"There is a small but growing number of layoff announcements explicitly attributed to AI and there are some signs of diminished hiring of entry-level workers in the most AI-exposed industries," he said.
He added that fears that AI will "take your job" could also be making workers more cautious, with economywide year-over-year wage growth falling to an almost five-year low in March.
However, more recent data from global outplacement firm Challenger, Gray & Christmas suggests AI's impact on employment is becoming more pronounced, though.
US-based employers announced 97,006 job cuts in May, with artificial intelligence accounting for roughly 40% of all layoffs announced during the month.
It marked the third consecutive month in which AI was the leading reason cited for job reductions.
"Despite this labor market 'scare' effect, however, it does appear that AI is, on balance, adding slightly to inflation in the short run, although it will be far from the most important inflation driver. If this continues to be the case, over say, the next two years, then this alone would negate the idea that a disinflationary impulse from AI supports the need for short-term interest rate cuts," Kelly said.
He expects AI to become a powerful disinflationary force over the longer term as productivity gains begin to emerge and spread across the economy.
Goldman Sachs has echoed that assessment, saying AI is currently adding to inflationary pressures even though it should ultimately lower production costs and lift economic growth.
"We expect artificial intelligence to deliver large productivity gains over the next several years, boosting the economy's potential growth rate and putting downward pressure on production costs. So far, however, AI is boosting US inflation," Goldman Sachs economists wrote last month.
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Microsoft CEO Satya Nadella George Chan/Getty Images If you own a company, Satya Nadella thinks you should build your own AI.
In an interview that went live Friday, Microsoft's CEO told Yash Patil, cofounder of Applied Compute, that every company should create AI models tailored to its own business.
"My simple thing is there should be as many models in the world as firms in the world," Nadella said. "Because after all, what is a firm? A firm is a learning system."
"I don't want to be locked into any one model," Nadella added. "I want to be able to use my own context, my own data — in fact, my own traces to maybe even take a much more open-weight, cost-efficient model or a fine-tuned model."
The comments mark one of Nadella's clearest visions yet for enterprise AI. Many companies rely on foundation models from a relatively small group of AI companies, including OpenAI, Anthropic, Google, and Meta.
Microsoft has increasingly embraced a multi-model strategy through Azure AI Foundry, which also hosts models such as DeepSeek and Cohere, rather than relying solely on OpenAI. Amazon has pursued a similar strategy with Bedrock, while Google Cloud offers a growing catalog of third-party and proprietary models alongside Gemini.
Many enterprises are also experimenting with open-weight AI models, which have publicly available parameters so that companies could fine-tune and deploy the AI themselves, such as Meta's Llama and Mistral's models.
Nadella said that AI concentration poses long-term economic risks.
"It can't be, 'Hey, look, I have two frontier models or three frontier models' or whatever, some finite set that have learned everything that is differentiated today in the economy because then it collapses,'" Nadella said.
"You can always buy a tool, you can even outsource a task or even a job, but you can't outsource your learning," Nadella added. "If you outsource your learning, then why exist?"
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AI Artificial Intelligence Microsoft More Leadership
New York, New York--(Newsfile Corp. - June 26, 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.
Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm, on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm/.
Attorney Advertising. Prior results do not guarantee a similar outcome.
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Source: The Rosen Law Firm PA
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Microsoft (MSFT +6.03%) stock gained ground today even as a substantial number of other leading artificial intelligence (AI) stocks suffered sell-offs. The company's share price climbed 5.2% in the daily session. Meanwhile, the S&P 500 traded roughly flat in the session, and the Nasdaq Composite ended the day's trading down 0.7%.
Investors appear to be reducing exposure to AI chip stocks and increasing holdings in top software players, and that's had a positive impact on Microsoft's valuation. For a bit of additional perspective, the stock is still down roughly 23% year to date even after today's rally.
Image source: Getty Images.
Microsoft gains on AI rotation The AI chip stock trade has been losing some steam recently, but that doesn't mean that investors are entirely giving up on artificial intelligence plays. Instead, money that had been invested in leading semiconductor stocks appears to be shifting into top software names.
Big gains for AI hardware leaders across 2026's trading may now be raising significant valuation concerns, and it looks like investors are now pivoting some of their capital into software players. There wasn't any huge, business-specific news for Microsoft today, but the tech giant saw valuation gains in conjunction with the AI rotation trend.
Today's Change
(
6.03
%) $
21.29
Current Price
$
374.12
What's next for Microsoft? Even after accounting for today's gains, Microsoft stock trades down roughly 31% from its high. While continued rotation into AI software stocks would likely have a bullish impact on the company's share price, it remains to be seen if the trend will continue. Microsoft still looks like a worthwhile long-term investment, but it's possible that appetite for AI stocks as a whole could be shaky in the near term as investors weigh macroeconomic risks and other factors.
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.
Microsoft (NASDAQ:MSFT | MSFT Price Prediction) stock is rebounding sharply Friday afternoon, with shares up 5% to $371 as the broader memory and semiconductor tape stabilizes. The bounce offers a rare bright spot in what has been a punishing stretch for one of the market’s most widely held names.
The recovery comes against a brutal backdrop as MSFT stock is down 25% year to date. Microsoft shares traded above $500 in November of last year, so the buyers still have some catching up to do.
Today’s move has reignited a debate across trading desks and retail forums: what could it actually take to push Microsoft stock back toward $500? The answer hinges on a handful of identifiable catalysts now coming into focus.
Memory Cost Fears and an AI Reset Drove the Decline The pressure on Microsoft stock traces to two intertwined worries. The first is rising memory costs rippling across the broader tech industry, squeezing margins and threatening demand. The selloff intensified after Apple (NASDAQ:AAPL) raised its prices on some products to offset surging memory costs, and Microsoft followed by hiking prices on its current-generation Xbox consoles.
The second pressure point is the AI trade itself. A New York Times report flagged a potential delay to OpenAI’s expected IPO, possibly into 2027. Because OpenAI is viewed as a bellwether for AI valuations, and Microsoft holds a 27% stake worth $135 billion, sentiment took a direct hit.
Compounding the concerns, Microsoft’s capital intensity has surged. The company’s Q3 FY2026 capex hit $30.88 billion, up 84% year over year, and CFO Amy Hood guided to $190 billion in capital expenditures for calendar 2026.
The Path Back to $500 The first catalyst is a sentiment shift on memory. If worries about a memory hardware shortage flip into concerns about a potential glut, the margin-squeeze narrative pressuring MSFT could ease. Undersupply tends to self-correct as producers ramp output to chase high prices, which can relieve component-cost pressure for buyers like Microsoft over time.
The second is the AI story re-rating. Microsoft’s AI business surpassed a $37 billion annual revenue run rate, up 123% year over year, and commercial RPO reached $627 billion, up 99% year over year. Any easing of OpenAI IPO concerns could put a bid back under the broader AI complex.
The third potential catalyst is execution. Microsoft’s Azure revenue grew 40% in constant currency last quarter, and Hood guided to Q4 FY2026 Azure growth between 39% and 40%. Ultimately, another clean print could rebuild confidence in Microsoft.
Sentiment Is Quietly Turning Retail conviction is starting to firm up. Reddit sentiment scoring shows MSFT moving from neutral (58) at 9 a.m. to bullish (64) by midday, with r/investing posting the strongest reading at 88. A top thread arguing Microsoft is “cheaper than the April 2025 Tariff crash, yet TTM EPS is up 30%” has gained traction throughout the session.
Wall Street hasn’t blinked, either. The analyst consensus price target for MSFT sits at $561, supported by 52 buy or strong buy ratings versus 3 holds and zero sells. Furthermore, Microsoft’s forward P/E ratio of 18x reflects expectations of continued earnings growth.
The prediction markets, however, are more skeptical about the near term. Polymarket pricing implies only an 11% probability that MSFT closes above $450 by the end of June, with the odds of touching $500 effectively negligible at current levels.
What to Watch A move back toward $500 would require a meaningful rebound and is far from guaranteed. Sustained memory-cost inflation, a deeper AI valuation reset, or weaker enterprise demand could each keep the stock pinned. Investors should consider keeping their Microsoft stock position sizes modest given the uncertainty.
For now, the read-through is straightforward. The setup includes a beaten-down mega-cap, a $627 billion contracted revenue backlog, and a sentiment tape that’s just beginning to turn. Investors can watch for whether today’s MSFT stock bounce follows through next week and whether memory-cost commentary softens.
The next major informational catalyst will be Microsoft’s Q4 FY2026 earnings report, where Azure growth and capex guidance could either spread anxiety or validate the recovery thesis. A clean beat with moderating capex commentary would meaningfully strengthen the path higher.
Here’s a look at the four stocks that appear both in Ackman’s hedge fund and in the stock portfolio of Pelosi, which is managed by her husband, Paul Pelosi.
The 4 Shared StocksThe Benzinga Government Trades page for Pelosi shows four stocks disclosed by the congresswoman in the past five years that have not been sold, and are also owned by Ackman’s hedge fund, according to data from 13FInfo.
Here are the four stocks owned by both Pelosi and Ackman:
Ackman disclosed owning 311,726 GOOG shares and 32,376 GOOGL shares in the Pershing Square fund at the end of the first quarter. Both positions were cut by 95% in the first quarter. Alphabet Class C shares were the ninth-largest position at 0.7% of assets in the quarter, with Class A shares the 11th-largest position at 0.1% of assets.
Ackman disclosed owning 11,451,981 Amazon shares in the first quarter, representing 17% of the Pershing Square Capital Management portfolio and the second largest position. The e-commerce giant was a new purchase by Pershing Square in 2025 and Ackman has been adding to the position in recent quarters, with a 19% increase in the share count in the first quarter.
Different Investing StylesPelosi’s husband has a history of buying call options that are in the money and have expiration dates of a year from the purchase date. He later exercised the options into common stock.
Investments are often made in the technology sector, favoring large-cap names.
Ackman is a value and activist investor, known for taking large stakes in companies with dominant positions in their sectors and for pushing for changes to unlock shareholder value.
Three of the four stocks Pelosi and Ackman have in common are members of the Magnificent 7 and among the most valuable companies in the world.
A recent purchase of Uber call options by Pelosi gives the two investors four stocks in common now and a new position outside the Magnificent Seven stocks.
This article was previously published by Benzinga and has been updated.
Image created using artificial intelligence via DALL-E.
Market News and Data brought to you by Benzinga APIs
Characteristics and Risks of Standardized Options: https://bit.ly/2v9tH6D. Microsoft (MSFT) shares have fallen more than 30% from all-time highs made almost a year ago.
Microsoft (MSFT) and Amazon (AMZN) screened well in a Jefferies survey showing stronger 2026 spending intentions for software, cloud and AI.Jefferies surveyed 4
, /PRNewswire/ -- The Law Offices of Frank R. Cruz announces that investors with losses related to Microsoft Corporation ("Microsoft" or the "Company") (NASDAQ: MSFT) have opportunity to lead the securities fraud class action lawsuit.
IF YOU ARE AN INVESTOR WHO SUFFERED A LOSS IN MICROSOFT CORPORATION (MSFT), CLICK HERE BEFORE AUGUST 11, 2026 (THE LEAD PLAINTIFF DEADLINE) TO PARTICIPATE IN THE ONGOING 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.
The Law Offices of Frank R. Cruz,
Email us at: [email protected]
Call us at: 310-914-5007
Visit our website at: www.frankcruzlaw.com
Follow us for updates on Twitter: twitter.com/FRC_LAW.
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.
SOURCE The Law Offices of Frank R. Cruz, Los Angeles
Microsoft-backed (MSFT) OpenAI is reportedly facing new government pressure over the rollout of GPT-5.6, a powerful upcoming AI model that U.S. officials want r
NEW YORK, June 26, 2026 (GLOBE NEWSWIRE) -- The Gross Law Firm issues the following notice to shareholders of Microsoft Corporation (NASDAQ: MSFT).
Shareholders who purchased shares of MSFT during the class period listed are encouraged to contact the firm regarding possible lead plaintiff appointment. Appointment as lead plaintiff is not required to partake in any recovery.
ALLEGATIONS: The complaint alleges that during the class period, Defendants issued materially false and/or misleading statements and/or failed to disclose that: (a) Microsoft’s Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; (b) Microsoft’s flagship proprietary AI model ranked well below competitors on a number of benchmark tests; (c) 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; and (d) as a result of (a)-(c) above, 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.
DEADLINE: August 11, 2026 Shareholders should not delay in registering for this class action. Register your information here: https://securitiesclasslaw.com/securities/microsoft-corporation-loss-submission-form/?id=190209&from=3
NEXT STEPS FOR SHAREHOLDERS: Once you register as a shareholder who purchased shares of MSFT during the timeframe listed above, you will be enrolled in a portfolio monitoring software to provide you with status updates throughout the lifecycle of the case. The deadline to seek to be a lead plaintiff is August 11, 2026. There is no cost or obligation to you to participate in this case.
WHY GROSS LAW FIRM? The Gross Law Firm is a nationally recognized class action law firm, and our mission is to protect the rights of all investors who have suffered as a result of deceit, fraud, and illegal business practices. The Gross Law Firm is committed to ensuring that companies adhere to responsible business practices and engage in good corporate citizenship. The firm seeks recovery on behalf of investors who incurred losses when false and/or misleading statements or the omission of material information by a company lead to artificial inflation of the company's stock. Attorney advertising. Prior results do not guarantee similar outcomes.
CONTACT:
The Gross Law Firm
15 West 38th Street, 12th floor
New York, NY, 10018
Email: [email protected]
Phone: (646) 453-8903
On June 26, the blue-chip technology giant Microsoft (NASDAQ: MSFT) received a sudden buy signal in the form of the legendary short trader, Michael Burry, making a long bet on the stock.
Specifically, the ‘Big Short’ investor revealed he has made a bullish MSFT bet by purchasing December 2028 LEAP call options that have a strike price in the low $700 range.
According to Burry, Microsoft stock has become attractive at roughly $350, but he decided to purchase derivatives on account of them being comparatively cheap.
Meanwhile, MSFT shares reacted immediately to the purchase from one of Wall Street’s most famous investors.
Indeed, Microsoft stock opened 4.09% in the green on Friday, June 26, erasing most of the losses it suffered since Wednesday. Still, the technology giant remains more than 11% in the red month-to-date, and an even more severe 22% down year-to-date (YTD).
Microsoft stock price one-week price chart. Source: Google Michael Burry portfolio performance in 2026 Elsewhere, despite the reputation Burry gained for his trading ahead of the Great Recession, his recent track record has been more mixed.
For example, the legendary investor’s long position in Lululemon Athletica (NASDAQ: LULU) remains in the red, and his bearish bet against the semiconductor giant Nvidia (NASDAQ: NVDA) has been teetering on the knife’s edge for weeks.
His bet against Palantir (NASDAQ: PLTR) – a bet he revealed to have partially covered at the same time he unveiled the MSFT long trade – has, on the other hand, been successful, and the software firm is down more than 33% in 2026.
Can Microsoft stock reverse its 2026 losses? Lastly, Michael Burry is far from the only prominent Microsoft bull. Despite the company’s struggles in the 2026 market, Wall Street has remained generally optimistic regarding its future.
Overall, MSFT stock is considered a ‘Strong Buy’ with a 51.88% forecasted rally to $562.10 in the next 12 months, per the data Finold retrieved from TipRanks on June 26.
Wall Street sets Microsoft stock price target for next 12 months. Source: TipRanks Furthermore, despite the volatility gripping the markets since the month started, Stifel Nicolaus’ Brad Redback is the only Wall Street expert to issue a ‘Hold’ recommendation for the equity in recent weeks. Furthermore, even the associated downgraded $400 price target estimates MSFT will rally from its press time price of $367.26 in the coming 52 weeks.
Featured image via Shutterstock
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SummaryMicrosoft Corporation has experienced a $1.3T market cap drawdown, the largest in its history, despite a generally bullish market.MSFT stock now trades at a forward earnings multiple of 21.7, near its 2022 buy levels, presenting a potentially attractive valuation.Recent concerns center on elevated FY26 capex guidance of $190B and significant exposure to OpenAI, which accounts for 45% of commercial RPO.Market sentiment has shifted as software faces AI disruption and OpenAI's reputation has diminished, intensifying scrutiny on MSFT's AI strategy.Looking for a helping hand in the market? Members of iREIT®+HOYA Capital get exclusive ideas and guidance to navigate any climate. Learn More »Sitewide Sale 2026: Get 20% Off Max Zolotukhin/iStock via Getty Images
Introduction Microsoft Corporation (MSFT) used to be a very easy stock to have in our portfolios. Remember when it traded to the low $200s during the 2022 bear market? That was such an easy buy that
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Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT 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.
Ives described the current market as a “Twilight Zone,” arguing that investors have become increasingly impatient with hyperscalers waiting for their massive AI investments to translate into meaningful revenue growth.
Microsoft, Meta Face An AI ‘Air Pocket’According to Ives, the market is currently in an “air pocket stage” where Big Tech’s unprecedented spending has yet to produce the financial payoff investors are looking for.
“We are in an ‘air pocket stage’ right now where the $700 billion of Big Tech cap-ex this year is fueling the AI buildout… and tech investors are growing increasingly frustrated by the patience needed around Microsoft and Meta in particular seeing the fruits of their labor,” Ives wrote.
The analyst said Microsoft and Meta are being treated “like they are bear market names that cannot be owned,” even though both remain central to what he calls the Fourth Industrial Revolution.
Instead of buying the companies building AI platforms, investors have rotated into beneficiaries such as Micron and other AI infrastructure names that are already seeing stronger demand and earnings momentum.
Why Micron Is Getting The Market’s AttentionIves believes the divergence reflects timing rather than fundamentals.
“Meta is essentially looking to transform its business and that requires massive investments that will take some time to hit numbers,” Ives said.
That gap has encouraged investors to favor companies with more immediate AI revenue catalysts, even as hyperscalers continue to finance the industry’s expansion.
Dan Ives Says The Opportunity Is In Big TechDespite the recent divergence, Ives believes investors are becoming too focused on short-term uncertainty.
The analyst argues the current weakness in Microsoft and Meta represents “short-term pain for long-term gain,” reiterating his view that the AI revolution remains in its early stages.
“We believe this is Year 3 of a 10-year AI buildout,” Ives wrote, adding that the recent bearish narratives surrounding Big Tech have overshadowed what he sees as “future massive growth prospects.”
For investors willing to look beyond near-term monetization concerns, Ives believes today’s “Twilight Zone” market could ultimately create some of the biggest buying opportunities in the AI trade.
Photo: renderis studio / Shutterstock
Market News and Data brought to you by Benzinga APIs
In this video, I will cover the bull and bear case for two of the biggest names in tech and explain whether the current valuation discount is a gift or a warning sign. Watch the short video to learn more, consider subscribing, and click the special offer link below.
*Stock prices used were from the trading day of June. 24, 2026. The video was published on June. 24, 2026.
Neil Rozenbaum has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms and Microsoft. The Motley Fool has a disclosure policy. Neil 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.
LOS ANGELES, June 26, 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]
The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?
Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Microsoft (MSFT - Free Report) .
Microsoft currently has an average brokerage recommendation (ABR) of 1.26, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 50 brokerage firms. An ABR of 1.26 approximates between Strong Buy and Buy.
Of the 50 recommendations that derive the current ABR, 42 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 84% and 6% of all recommendations.
Brokerage Recommendation Trends for MSFT
Check price target & stock forecast for Microsoft here>>>
The ABR suggests buying Microsoft, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.
In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.
With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.
ABR Should Not Be Confused With Zacks RankIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.
On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.
Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.
Is MSFT Worth Investing In?Looking at the earnings estimate revisions for Microsoft, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $17.33.
Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Microsoft. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for Microsoft.
NEW YORK, June 26, 2026 (GLOBE NEWSWIRE) -- Leading securities law firm Bleichmar Fonti & Auld LLP announces that a class action lawsuit has been filed against Microsoft Corporation (NASDAQ:MSFT) and certain of the Company’s senior executives for securities fraud after its significant stock drop resulting from potential violations of the federal securities laws.
If you invested in Microsoft, you are encouraged to obtain additional information by visiting: https://www.bfalaw.com/cases/microsoft-class-action-lawsuit.
Key Details of the Microsoft ($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.
Two of the largest companies on the planet are both in drawdowns, but the dips look nothing alike. So which one should a retirement-focused investor own right now: Apple (NASDAQ: AAPL | AAPL Price Prediction) or Microsoft (NASDAQ: MSFT)?
Apple represents the shallow pullback inside a healthy trend, trading at $275.15, down 10.9% over the past month but still up 1.2% year to date and 36.5% over the past year. Microsoft represents the deeper, more contrarian drawdown, trading at $352.83, down 27.0% year to date and 28.3% lower than a year ago. With the CBOE Volatility Index (VIX) at 20.2, Microsoft’s decline reflects stock-specific weakness against a calm broader market.
Valuation: Microsoft Wins Apple trades at a trailing P/E of 36 and a forward P/E of 34, with a price-to-book ratio above 54x. Microsoft trades at a trailing P/E of 21 and a price-to-book of 6.3. A thesis that has dominated r/stocks puts it bluntly: “Microsoft is now cheaper than the April 2025 Tariff crash, yet TTM EPS is up 30%.” Microsoft is the cheaper stock, both relative to Apple and relative to its own recent history. Edge: Microsoft.
Forward Catalyst: Microsoft Wins Apple’s recovery path runs through hardware. Prediction markets assign a 96.1% probability to an iPhone 18 launch in 2026 and an 84.5% probability to a foldable iPhone before 2027. Demand is already strong: iPhone revenue reached $56.99 billion last quarter, with CEO Tim Cook citing “extraordinary demand for the iPhone 17 lineup.”
Microsoft’s catalyst is larger and already reflected in the numbers. Azure grew 40% last quarter, the AI business hit a $37 billion annualized run rate, up 123% year over year, and commercial remaining performance obligations nearly doubled to $627 billion. Satya Nadella framed it directly: “Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.”
Analyst consensus targets back this up at $561.39 for Microsoft versus $314.42 for Apple. Edge: Microsoft.
Downside Risk: Apple Wins This is where Apple claws back a dimension. Apple’s chart is intact: it trades above its 200-day moving average of $269.03, with a beta of just 1.086. Microsoft has lost roughly a quarter of its value in six months, and prediction markets give only a 32% probability that Microsoft’s valuation exceeds the combined Anthropic + OpenAI mark by year-end, a clear signal of the competitive overhang. Microsoft also deployed $30.88 billion of capex in a single quarter, up 84.39% year over year, and any delay in payback could compress returns. Apple’s downside risks (China exposure, tariffs, and elevated debt-to-equity of 1.52) remain, yet the trend has held. Edge: Apple.
Verdict Microsoft appears to be the better dip buy for retirement-focused investors. It is cheaper on every multiple that matters, its AI and Azure engines are compounding at rates Apple’s hardware cycle cannot match, and it pays a higher dividend yield of 1.0% versus Apple’s 0.4%, supported by stronger operating margins of 45.6% and an investment-grade balance sheet with a debt-to-equity ratio of just 0.18.
Retirees forgo some near-term price stability compared with Apple’s milder dip, but they gain a lower entry multiple on a faster-growing business with $627 billion in contracted future revenue already on the books. Apple remains the choice for investors who prioritize buyback-driven capital returns (a fresh $100 billion authorization) and brand-moat stability above all else. For everyone else focused on retirement compounding, Microsoft is the better choice.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.
Is the AI capex boom built to last, or is consumer tech running out of room? Sunil Garg breaks down the bull and bear cases for the tech and memory markets, explaining why upstream infrastructure is thriving while Big Tech and software platforms are facing mounting pressure.
Item 1 of 2 A man walks by the logo of Microsoft in a shop of Brussels September 17, 2007. Microsoft suffered a stunning defeat on Monday when a European Union court backed a European Commission ruling that the U.S. software giant illegally abused its market power to crush competitors. This logo has been updated and is no longer in use. REUTERS/Sebastien Pirlet (BELGIUM)
[1/2]A man walks by the logo of Microsoft in a shop of Brussels September 17, 2007. Microsoft suffered a stunning defeat on Monday when a European Union court backed a European Commission ruling that... Purchase Licensing Rights, opens new tab Read more
CompaniesROME, June 26 (Reuters) - Italy's antitrust authority said on Friday it had opened an investigation into Microsoft (MSFT.O), opens new tab over alleged unfair commercial practices linked to the price hike of its "Microsoft 365" subscription.
The regulator said the Windows maker did not adequately inform consumers that its Microsoft 365 service had been integrated with artificial intelligence tools Copilot and Designer.
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Consumers were automatically moved to a more expensive subscription plan unless they actively opted out, while receiving insufficient information to decide whether to renew their contracts, the watchdog added in its statement.
It added that the tech giant's practice could be considered aggressive because it unduly limited consumers' freedom of choice.
Microsoft was not immediately available for comment.
Reporting by Giulia Segreti, editing by Alvise Armellini
Our Standards: The Thomson Reuters Trust Principles., opens new tab
Microsoft (MSFT 3.66%), an enterprise software and cloud services provider, closed at $352.83, down 3.45%. Stifel cut its price target to $400 from $415 and kept a Hold rating, while investors are watching Azure growth and AI spending.
How the markets moved todayThe S&P 500 (^GSPC 0.01%) slipped 0.01% to 7,357, while the Nasdaq Composite (^IXIC 0.46%) fell 0.46% to 25,359. Among application software and cloud infrastructure rivals, Oracle (ORCL 3.05%) closed at $152.46, down 3.10%, and Alphabet (GOOGL 0.30%) finished at $342.19, down 0.82%, showing that large-cap tech weakness extended beyond Microsoft.
What this means for investorsMicrosoft shares declined after Stifel reduced its price target and expressed concerns that margin expectations may be unrealistic as the company increases investment in AI infrastructure. While Azure growth continues to support the stock, investors are assessing whether demand for cloud and AI products can offset the rising costs of expanding and operating these services.
The Xbox price increase adds a smaller reminder that higher memory and storage costs are affecting parts of Microsoft’s business, though the larger investor debate remains on cloud margins and AI returns. Investors will be following closely whether Azure and AI services can keep driving growth while limiting further pressure on profitability.
Eric Trie has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Oracle. The Motley Fool has a disclosure policy.
Microsoft's (MSFT 3.66%) stock is down more than 20% in 2026.
*Stock prices used were the afternoon prices of June 22, 2026. The video was published on June 24, 2026.
Parkev Tatevosian, CFA has positions in Microsoft. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
Why: Rosen Law Firm, a global investor rights law firm, reminds purchasers of common stock of Microsoft Corporation (NASDAQ: MSFT) between May 1, 2025 and January 28, 2026, inclusive (the "Class Period"), of the important August 11, 2026 lead plaintiff deadline.
So What: If you purchased Microsoft common stock during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.
What to do next: To join the Microsoft class action, go to https://rosenlegal.com/cases/microsoft-corporation/join or call Phillip Kim, Esq. toll-free at 866-767-3653 or email [email protected] for information on the class action. A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than August 11, 2026. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.
Why Rosen Law: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources, or any meaningful peer recognition. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm has achieved the largest ever securities class action settlement against a Chinese Company. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered billions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs' Bar. Many of the firm's attorneys have been recognized by Lawdragon and Super Lawyers.
Details of the case: According to the lawsuit, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) Microsoft's Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; (2) Microsoft's flagship proprietary AI model ranked well below competitors on a number of benchmark tests; (3) Microsoft needed to increase by billions of dollars its capital expenditures and divert graphics processing unit ("GPU") and central processing unit ("CPU") capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related research and development ("R&D"); and (4) as a result, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and Microsoft's Copilot offerings had lost market share to rival products, a trend that was increasing. When the true details entered the market, the lawsuit claims that investors suffered damages.
To join the Microsoft class action, go to https://rosenlegal.com/cases/microsoft-corporation/join or call Phillip Kim, Esq. toll-free at 866-767-3653 or email [email protected] for information on the class action.
No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. An investor's ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.
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Microsoft Corporation's data center capacity expansion to 10GW by FY26 is projected to accelerate Cloud revenue growth by 12.4% to 21.3%, aided by the Anthropic Azure AI Foundry deal. Average revenue per user for Office 365 can surprise to the upside as Copilot adoption drives a transition toward consumption-based and usage-based compute pricing models. Aggressive capital expenditure projected to reach $190B by the end of CY26 carries an estimated negative ROI of -9.3%, signaling that Microsoft is overpaying for revenue growth.
, /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against Microsoft Corporation ("Microsoft" or the "Company") (NASDAQ: MSFT). Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
The class action concerns whether Microsoft and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.
You have until August 11, 2026, to ask the Court to appoint you as Lead Plaintiff for the class if you purchased or otherwise acquired Microsoft securities during the Class Period. A copy of the Complaint can be obtained at www.pomerantzlaw.com.
[Click here for information about joining the class action]
On January 28, 2026, Microsoft announced disappointing results for its fiscal second quarter ended December 31, 2025. First, during the quarter Microsoft's Azure growth had slowed suddenly and fallen below analyst expectations. During the related earnings call, CFO Amy E. Hood revealed that the slower Azure growth was primarily due to computational capacity constraints, as Microsoft had diverted CPU and GPU capacity to Copilot applications and AI-related R&D. Second, Microsoft revealed that its capital expenditures had increased to $37.5 billion during the quarter, causing Microsoft's capital expenditures for the first six months of its fiscal 2026 to increase to $72.4 billion compared to $88.2 billion for all of Microsoft's fiscal 2025. Third, Microsoft revealed, for the first time, that the number of paid Microsoft 365 Copilot seats totaled only 15 million to date, materially below analyst estimates and a fraction of the more than 450 million commercial Microsoft 365 users.
On this news, the price of Microsoft stock fell nearly 10%.
Then, on February 3, 2026, The Wall Street Journal revealed, in an article titled "Microsoft's Pivotal AI Product Is Running Into Big Problems," that severe challenges and functionality issues had plagued Microsoft's Copilot offerings, leading to Copilot losing market share during the Class Period to competing products such as Google's Gemini. The price of Microsoft stock continued to fall in the days after Microsoft's second quarter 2026 earnings announcement as the market continued to digest the adverse news and sources such as The Wall Street Journal revealed new adverse information.
Thereafter, on March 17, 2026, The Wall Street Journal revealed in an article titled "Microsoft Seeks More Coherence in AI Efforts With Copilot Reorganization" that Microsoft was reorganizing its Copilot product teams to unify commercial and consumer versions partly in response to the challenges revealed by The Wall Street Journal's prior reporting on Copilot's problem-plagued development and disappointing customer adoption.
On this news, the price of Microsoft stock continued to fall.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.
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Microsoft’s Xbox is raising prices of its gaming consoles by up to $150 worldwide, citing a deepening global components crisis that has sent storage and memory costs soaring across the consumer electronics industry.
Groups representing automakers, retailers, electronics firms and others had warned earlier this month that the increasing demand for memory chips could lead to dramatic price hikes in U.S. consumer goods and disrupt supply chains.
Effective Aug. 1, the price of Xbox consoles will increase by $100 for 512 GB models and $150 for 1 TB models. Microsoft will also discontinue its 2 TB model.
Microsoft Xbox said prices for its gaming consoles will rise as much as $150 this summer. CFOTO/Future Publishing via Getty Images “Unfortunately, console storage and memory prices have increased by more than 2.5 times and we expect another doubling by the fall of 2027,” Xbox said, adding that the hardware supply chain crisis has hit the gaming sector particularly hard.
Xbox raised the prices of its consoles twice last year as it grappled with tariff-induced cost pressures, strong competition and uncertain spending.
Rival Sony raised the prices of its PlayStation 5 consoles in April, following a price increase last August last year.
Microsoft Xbox raised prices on its gaming consoles twice last year. Bloomberg via Getty Images Apple, the world’s most valuable consumer electronics company, raised iPad and MacBook prices on Thursday, saying it could no longer shield customers from soaring memory and storage chip costs driven by the AI industry’s datacenter buildout.
Xbox is planning major layoffs next month and significant cuts to marketing and other budgets, Bloomberg News reported earlier this month.
Key Takeaways Microsoft's Majorana research faces scrutiny, fueling debate over quantum validation and potential.D-Wave Quantum reported Q1 2026 bookings of $33.4M, driven by enterprise demand and system sales.D-Wave Quantum's 2026 loss estimate improved to 25 cents per share, with six positive estimate revisions. A recent scientific dispute surrounding Microsoft's (MSFT - Free Report) quantum-computing program has become one of the most-watched developments in the quantum sector this week. Yesterday, researchers published a critique in Nature questioning whether Microsoft's experimental results provide sufficient evidence for the Majorana particles that support its topological-qubit architecture (ref: BBC). Microsoft has disputed the criticism and maintains confidence in its research roadmap.
This has led to a serious investment debate within the industry — should investors focus on scientific validation or long-term platform potential? Let’s delve deeper.
Why Microsoft's Quantum Strategy Is Under ScrutinyMicrosoft is pursuing a topological-qubit architecture, a markedly different approach from the superconducting and trapped-ion technologies that currently dominate much of the quantum-computing industry, including those used by IonQ (IONQ - Free Report) , Rigetti Computing (RGTI - Free Report) and several large technology companies such as IBM (IBM - Free Report) and Google.
Rather than pursuing incremental improvements in existing quantum systems, Microsoft is attempting to develop topological qubits that could theoretically deliver lower error rates and greater scalability. However, this approach also comes with significantly higher scientific and technical risks.
The controversy started only months after Microsoft introduced its Majorana 1 chip and weeks after unveiling Majorana 2, which the company said delivered reliability improvements and reinforced its long-term quantum roadmap. However, a peer-reviewed critique published on June 24 argued that Microsoft's data does not conclusively demonstrate the Majorana signatures required to validate its approach. Microsoft has defended its findings and maintains that its development plans remain unchanged.
For investors, the dispute is primarily about scientific validation rather than commercial execution. Microsoft's quantum initiative remains a relatively small part of its overall business, limiting any near-term financial impact. However, the episode highlights a broader lesson for the quantum-computing sector. Investors are increasingly rewarding companies that can demonstrate measurable technical progress and commercial traction, rather than relying solely on breakthrough claims.
Why D-Wave Stands Out Amid the UncertaintyFor investors, the critical question is whether the episode changes how they evaluate quantum-computing companies more broadly.
In that regard, investors should now focus on measurable commercial traction and independently verifiable technical milestones. Among publicly traded quantum names, D-Wave Quantum (QBTS - Free Report) stands out because its investment cases are currently being driven more by execution than by unresolved scientific claims.
D-Wave reported first-quarter 2026 bookings of $33.4 million, a nearly twentyfold increase from the prior-year period, supported by enterprise demand and system sales. The company has also expanded beyond its traditional annealing platform through the acquisition of Quantum Circuits and the launch of a gate-model roadmap, providing investors with multiple paths to commercialization.
Image Source: Zacks Investment Research
The improving commercial outlook is also beginning to show up in analyst expectations. According to Zacks Consensus Estimate, D-Wave's projected 2026 loss has narrowed over the past 90 days, with the consensus estimate improving from a loss of 31 cents per share to a loss of 25 cents.
Notably, six analysts have raised their full-year 2026 estimates over the past 60 days, reflecting growing confidence in the company's commercialization strategy and accelerating customer adoption.
While D-Wave currently remains unprofitable, the direction of estimate revisions suggests that Wall Street is becoming increasingly optimistic about the company's path toward improved operating performance.
Bottom LineMicrosoft's latest controversy shows an important reality for quantum-computing investors. Scientific breakthroughs can generate excitement, but long-term shareholder value will ultimately depend on commercial execution and independently validated technical progress. As the industry moves closer to fault-tolerant quantum computing, investors are likely to reward companies that can demonstrate customer adoption, revenue growth and measurable technological advancement, while placing less emphasis on breakthrough claims that remain subject to scientific debate.
Against this backdrop, D-Wave Quantum appears relatively well-positioned, supported by its recent development and improving earnings expectations in recent months. As the stock currently carries a Zacks Rank #3 (Hold), existing investors may consider maintaining their positions as the company advances its commercialization strategy. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
HomeIndustriesSoftwareTech StocksTech StocksThose who owned Microsoft’s stock for the free-cash-flow profile now ‘are being asked to underwrite a capital-intensity cycle,’ says one analystJune 25, 2026, 4:51 p.m. ET
Microsoft’s stock is having its worst month since 2000, and it’s tracking toward one of its worst annual performances on record, exemplifying a broader rotation out of the “Magnificent Seven.”
Shares of Microsoft MSFT closed down 3.5% on Thursday, and the stock ranks 485th out of 503 in the S&P 500 SPX in terms of performance on a month-to-date basis, according to Dow Jones Market Data. It’s down 21.6% over the course of the month so far, in what could be its worst-ever June performance.
Microsoft MSFT shares inched lower and printed a fresh 52-week low this morning after a senior Stifel analyst, Brad Reback, lowered his price target on the tech behemoth to $400.
As sentiment shifts from blind AI enthusiasm to cold financial scrutiny, MSFT’s relative strength index (RSI) has crashed into the late 20s, indicating “oversold” conditions that often trigger a near-term reversal.
Still, Reback recommends some caution in playing Microsoft stock that’s already down more than 25% year-to-date.
In his research note, Reback argued the current consensus estimates for Microsoft are “somewhat” ignoring the potential for severe margin compression ahead.
“Severe costs associated with running and scaling Azure’s rapid growth will create unprecedented friction,” he told clients.
According to the Stifel analyst, MSFT’s gross margins (2027) could shrink by 450 basis points on a year-over-year basis to about 63%, significantly below Street’s optimistic consensus of 66.5%.
This dramatic contraction is almost entirely structural – driven by explosive capex and subsequent heavy depreciation costs of building, cooling, and maintaining specialized AI data centers.
Note that MSFT shares are currently trading decisively below their major moving averages (MAs), reinforcing that bears remain firmly in control.
Stifel trimmed its price objective on Microsoft shares also because it believes the consensus EPS estimates for FY27 are inflated by a full dollar.
Wall Street currently expects the titan’s full-year per-share earnings to come in at $19.45, a number analyst Brad Reback sees as highly unrealistic given its surging finance lease obligations and upper single-digit operating expense growth.
This structural expenditure leaves very little room for traditional enterprise cost-cutting measures to balance the scales.
Plus, he also highlighted a continuous decline in organic free cash flow as a major corporate red flag.
If FCF fails to rebound in FY27, Microsoft’s historical flexibility to “aggressively” fund growing shareholder dividends and execute massive share buyback plans will face restrictive boundaries – the analyst added.
All in all, Stifel’s research report perfectly encapsulates a broader, sector-wide realignment hitting the entire technology architecture space.
The market is aggressively transitionary; investors are no longer content with magnificent top-line annualized AI run rates (such as Microsoft's recent $37 billion metric) if it requires tracking toward an astronomical $190 billion in annual capital spending to secure it.
As capex intensity across the enterprise software sector balloons, Wall Street is enforcing a stricter valuation discipline, punishing firms whose near-term cash return profiles are being swallowed by multi-year infrastructure cycles.
For MSFT stock, breaking out of this bearish cycle will require proving to a newly skeptical market that its heavily funded Copilot and Azure AI products can efficiently convert into highly profitable, high-margin software recurring revenue rather than remaining capital-guzzling utilities.
Hours after Apple announced price increases for MacBooks and iPads, Microsoft said consumers can also expect to pay more for Xbox game consoles, reflecting rising component costs.
Starting Aug. 1, Xbox Series S consoles containing 512GB of storage will go up by $100 to about $500, Microsoft said Thursday, while models with 1TB will increase by $150 more. The entry-level Xbox Series X will now start at about $750.
"Last October, we increased XBOX console price by $20-$70 in the U.S.," the company said in a blog post. "We hoped another price increase would not be necessary, and we have spent the last several months working with suppliers on options."
Microsoft said "console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027."
Memory manufacturers such as Micron and SK Hynix have a limited capacity, and they are prioritizing high-bandwidth memory for artificial intelligence infrastructure, such as Nvidia's graphics processing units. Manufacturers are raising prices to reflect higher demand, resulting in wider profit margins.
That puts a strain on consumers looking to buy devices such as smartphones, tablets and computers. Apple's announcement on Thursday came after CEO Tim Cook told The Wall Street Journal that price increases had become inevitable.
"The entire consumer electronics industry is struggling with the current components crisis, but the effects are particularly hard on consoles," the Xbox unit said in the post. "Unlike phones, computers, speakers, and other consumer devices, consoles are typically not sold at a profit, but instead for less than they cost to make."
Microsoft said the 2 TB Xbox Series X, introduced in 2024, will no longer be available.
Microsoft shares sank almost 4% on Thursday. Apple's stock dropped 5%.
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Microsoft announced price hikes for its Xbox Series X on Thursday, effective August 1. Phil Barker/Future Publishing via Getty Images Shoppers got a double whammy of bad news on Thursday as Microsoft announced yet another round of Xbox price hikes hours after Apple boosted prices.
Taken together, the price increases — which both companies say are due to spiking memory and storage costs — are set to make holiday shopping significantly more expensive. For gamers, it makes gaming increasingly feel like a luxury hobby.
Microsoft's popular Xbox game consoles are set to increase by $100-$150 on August 1. The 512 GB models will go up by $100, and the 1 TB versions will increase by $150. The Xbox with the highest available storage configuration of 2 TB will be discontinued entirely.
"Last October, we increased XBOX console price by $20-$70 in the U.S. We hoped another price increase would not be necessary, and we have spent the last several months working with suppliers on options," Microsoft said in a blog post. "Unfortunately, console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027."
The new price hikes will apply worldwide.
This is the third time Microsoft has raised prices on its latest Xbox generation, following increases in May and October 2025. The Xbox Series X is now $250 to $300 more expensive than it was when it launched in 2020.
The memory shortage has impacted a broad range of consumer electronics companies, many of which have raised prices in the last 8 months.
Microsoft's chief rivals in the gaming wars, PlayStation and Nintendo, have both previously announced price increases for the PS5 and Nintendo Switch 2, respectively.
Computers, which also rely on memory and storage chips, have also become more costly to produce, and Apple followed many of its peers in boosting MacBook and iMac prices, along with the iPad, Apple TV, HomePod, and Vision Pro, on Thursday — by as much as $300.
"The entire consumer electronics industry is struggling with the current components crisis, but the effects are particularly hard on consoles," Microsoft said. "Unlike phones, computers, speakers, and other consumer devices, consoles are typically not sold at a profit, but instead for less than they cost to make."
In its blog post announcing the coming price hikes, Microsoft shared details on programs it said "make XBOX consoles more accessible," such as buy-now-pay-later and interest-free financing services, along with efforts to make previously used game consoles available via retailers to purchase.
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Steven Tweedie You're currently following this author! Want to unfollow? Unsubscribe via the link in your email.
Steven Tweedie is a Deputy Executive Editor at Business Insider. He launched the Business News desk in early 2020 and helped grow it into the Trending and Tech News desk, a fast-paced reporting powerhouse that tackles the biggest business and tech stories of the day in an approachable way. He now oversees the Business News desk, Corporate team, and Weekend desk. He works out of the New York newsroom and helps train fellows and new hires at all experience levels in addition to his daily editing duties.He began his career covering app startups and gadgets on the Technology desk at BI. His past reporting and scoops have been cited or syndicated by publications including the WSJ, Associated Press, CNN, Bloomberg, The Guardian, and Forbes. He attended the University of Michigan, where he studied economics and writing, and now lives in Brooklyn.While passionate about editing and helping lead the newsroom's daily business coverage, he also puts on his reporting hat every now and then to chase down a scoop — so don't hesitate to reach out!Have a news tip? Email Steven from a non-work email at [email protected] him on X and Threads for the latest.Featured work:▲Leaked memo: Wayfair CEO tells employees to expect long hours 'blending work and life' (scoop) ▲ Magic Leap's CFO is stepping down after it was 'mutually decided' it was time for someone new (scoop)▲ 48 hours after raising $500 million, Magic Leap called the cops to say an employee had stolen $1 million (scoop)▲ A conversation with the father of virtual reality about the changing culture of Silicon Valley▲ The future of virtual reality is here▲ The first details on the executive shakeup planned for Yahoo once its deal with Verizon closes (scoop)▲ What it's like to log in to computers in North Korea, which run look-alike Mac software called 'Red Star 3.0'
