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Microsoft’s Worst Month Since 2000: Why Is This Happening?
Benzinga • • business
Key Points:
- Microsoft's revenue and earnings have consistently grown between 16% and 18% year over year for eight quarters, surpassing Wall Street estimates each time.
- Despite strong financial performance, Microsoft's stock has dropped over 35% since early 2026 due to soaring capital expenditures (capex) on AI data centers.
- Capital spending reached $38 billion last quarter and is projected to hit $190 billion in 2026, putting pressure on margins and reducing free cash flow by 10%.
- Increased capex limits funds available for shareholder rewards like buybacks and dividends, causing investor concerns about the company's near-term profitability.
- The market is focusing less on current earnings and more on the massive future costs required to build AI infrastructure, leading to skepticism about whether Microsoft is sacrificing present value for future growth.
