Microsoft (NASDAQ: MSFT) shares have declined over 25% from their recent high, marking its second-worst drawdown in the past decade. This slump coincides with heightened scrutiny on OpenAI, in which Microsoft has invested heavily. OpenAI currently accounts for $281 billion of the $625 billion cloud computing backlog in Azure, while Microsoft has committed $120 billion to AI infrastructure for 2024.
The downturn has been exacerbated by fears of AI disruption in the software industry and the challenges OpenAI faces in competing and meeting financial obligations. Analysts indicate that the stock could be positioned for a rebound as it trades at less than 25 times earnings, near the lowest P/E ratio in ten years, provided Microsoft maintains its fundamental business strengths amid evolving AI dynamics.
