By Daniel Foelber
Publication Date: 2026-02-02 17:00:00
Key Points
Capital expenditures are growing far faster than revenue and earnings.
Microsoft’s AI bets are bold, but calculated.
Microsoft can afford to ramp up AI spending without compromising its financial health.
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Last year, I predicted that Microsoft (NASDAQ: MSFT) would hit an all-time high even after a brutal tariff-induced sell-off in April 2025. Microsoft reached an all-time high of $555.45 per share in late October. But Microsoft is now hovering around an eight-month low, with the stock falling 10.5% after reporting its second-quarter fiscal 2026 earnings on Jan. 28.
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Here’s why Microsoft has been under pressure even as the S&P 500 continues to make new all-time highs, and whether the stock can recover in 2026.
Image source: Getty Images.
