By Daniel Foelber
Publication Date: 2026-05-04 08:21:00
Microsoft (MSFT +1.62%) has rallied from its 2026 lows in a similar fashion to its “Magnificent Seven” peers, Nvidia, Alphabet (GOOG +0.34%) (GOOGL +0.20%), Apple, Amazon (AMZN +1.21%), Meta Platforms, and Tesla. But even with that recovery, Microsoft is still down 15.7% year to date — a significant underperformance relative to both the S&P 500 and Nasdaq Composite.
Here’s why Microsoft’s investment thesis has gotten more complicated, and how to approach this stock right now.
Image source: The Motley Fool.
Microsoft’s AI outlays just keep growing
Microsoft reported excellent quarterly results on April 29. For its fiscal 2026 third quarter, which ended March 31, it grew revenue by 18% year over year, operating income by 20%, non-GAAP (generally accepted accounting principles) net income by 20%, and non-GAAP diluted earnings per share by 21%. Microsoft’s artificial intelligence (AI) revenue surpassed an annual run rate of $37 billion, a 123% increase. Azure and other cloud…
