Microsoft Reports Struggles Amid Growth
Microsoft (NASDAQ: MSFT) is currently the worst-performing member of the “Magnificent Seven,” down about 13% year-to-date in 2026. In contrast, other tech giants like Alphabet and Tesla have seen significant gains, with the S&P 500 up over 8%. Despite Microsoft’s stock slide, the company reported an 18% year-over-year revenue increase to $82.9 billion in its fiscal third quarter, and operating income rose by 20% to $38.4 billion.
Microsoft’s AI business, reported to have an annual revenue run rate exceeding $37 billion, has doubled over the past year. The company is now trading at a forward price-to-earnings ratio of about 22, one of the lowest among its peers, while also offering a modest dividend yield of 0.9%. However, capital expenditure is projected at roughly $190 billion for 2026, a 61% increase, placing pressure on margins as the company builds out its data centers.
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