Key Points
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Microsoft’s share price fell 24% in Q1 2026, marking its steepest decline since late 2008.
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The company plans to increase capital expenditures to $146 billion in fiscal 2026, focusing on AI infrastructure.
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Microsoft reported a 17% revenue jump to $81.3 billion in Q2 2026.
Microsoft (NASDAQ: MSFT) faced a significant downturn in the first quarter of 2026, with a share price drop of 24%, the steepest since the Great Recession. This decline was attributed to increased capital expenditures, specifically a planned $146 billion investment aimed at bolstering AI infrastructure, and the underperformance of its Copilot generative AI tools, which saw only 450 million users largely on the free tier.
Despite these challenges, Microsoft’s financial outlook remains positive; the company reported a 17% increase in revenue, amounting to $81.3 billion in Q2 2026, and a 60% year-over-year increase in earnings. Analysts remain optimistic, with 54 out of 57 rating the stock as a “buy,” projecting a 12-month price target suggesting more than 60% upside potential.
