Suffering from dual pressures of AI, Microsoft may have its worst quarterly performance since 2008

Ask AI · Why Didn’t Microsoft’s AI Investment Boost Market Confidence?

【Suffering Dual Pressure From AI, Microsoft May Post Its Worst Quarter Since 2008】According to Caixin (March 27), Microsoft is at the intersection of two increasingly worrisome trends sweeping the tech industry, which could result in the stock recording its worst quarterly performance since the global financial crisis of two decades ago. First, as more and more on Wall Street question when investment in AI infrastructure will translate into more tangible returns in revenue growth, this software giant is nonetheless ramping up capital expenditures. Second, investors are selling software stocks because they worry that AI startups such as Anthropic and OpenAI are building agents that could replace products from companies like Microsoft. The company’s share price fell 24% in the first quarter, and it could mark its biggest decline since a 27% drop in the fourth quarter of 2008. Since the beginning of this year, among the “Magnificent Seven” tech stocks, Microsoft’s performance has been clearly the weakest, while an index that tracks this group is down 13% over the same period. This round of selling has made the stock appear relatively cheap—its price-to-earnings ratio based on expected earnings over the next 12 months is below 20, the lowest since June 2016. Microsoft’s valuation multiple is slightly higher than the S&P 500 index, and recently it has traded at a discount relative to this broad equity benchmark—the first time since 2015.