TLDR
- Microsoft (MSFT) stock is on pace for an 18% drop in June, its worst month since December 2000.
- Shares are down 24% year to date, the worst performance among the Magnificent 7 group.
- About $857 billion in market value has been wiped out so far this year.
- Investors are worried about heavy AI capex spending and the risk that AI disrupts Microsoft’s core software business.
- Michael Burry disclosed call options on Microsoft last week, helping spark a 6% rally on Friday.
Microsoft stock is having a rough June, and the numbers back it up. Shares are down roughly 18% this month, putting the company on track for its worst month since the dot-com bust of December 2000.
The stock has fallen 24% since the start of the year. That’s the worst showing of any company in the Magnificent 7.
Microsoft has lost about $857 billion in market value during that stretch. The stock is now trading near its lowest level since 2023.
It’s a strange spot for a company that looked like one of the safer AI bets. Microsoft has a diversified business, a strong cloud platform in Azure, and its own AI assistant in Copilot.
Compare that to Apple, which has struggled with AI perception issues, or Meta, which is heavily tied to AI spending with little else to fall back on. Microsoft was supposed to be the steady one.
A Two-Front Problem
Instead, Microsoft is dealing with pressure from two directions at once. Investors are pushing back on the company’s massive AI capital spending, which is now projected to hit $190 billion by year-end.
At the same time, there’s growing unease that AI tools could eventually make traditional software products less essential. Microsoft remains the world’s biggest software company, so that worry hits close to home.
Jack Ablin, chief investment strategist at Cresset Wealth Advisors, summed up the dilemma to Bloomberg. He noted that whether AI renders products like Word or Excel obsolete is still an open question, but the spending itself is already a concern.
In its fiscal third-quarter earnings report in late April, Microsoft forecast only “modest” growth for Azure. That guidance, paired with the higher capex number, didn’t sit well with investors.
Valuations Hit a Multi-Year Low
Microsoft’s forward price-to-earnings ratio dropped to about 21 times last week. That’s its lowest level in roughly three years.
That has split opinion on Wall Street. Some see it as a fair re-rating given the spending concerns. Others see a buying opportunity.
Michael Burry, the investor known for his “Big Short” call, falls into the second camp. He revealed in a Substack post last Thursday that he bought call options betting Microsoft shares would climb into the low $700s by 2028.
His post appeared to move the market. Microsoft stock jumped 6% the following Friday.
Deutsche Bank analysts, led by Brad Zelnick, also remain upbeat. The bank kept its Buy rating and $550 price target last week, citing confidence in Microsoft’s ability to expand operating margins over time.
Microsoft isn’t alone in this situation. Fellow hyperscaler Oracle has faced a similar combination of capex pushback and software disruption fears, and its stock chart has tracked a similar pattern in 2026.
One difference is how each company is funding its AI buildout. Oracle has leaned heavily on debt, which has put a spotlight on its bond market activity as a gauge of investor sentiment toward AI spending broadly.
For now, Microsoft sits at the bottom of the Magnificent 7 rankings. The stock’s next moves will likely hinge on whether AI capex spending keeps climbing and whether Azure’s growth numbers can pick up pace in upcoming earnings reports.
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