Microsoft’s Stock Struggles Despite 40% Azure Growth and a $190B AI Bet

The disconnect between Microsoft’s operating strength and its share price has rarely been starker. The software giant posted double-digit revenue growth, a surging cloud backlog, and a dividend hike in recent months, yet its stock has shed 16% since January and now sits nearly 30% below the October 2025 all-time high of €478.10. At €337.85, the shares trade below both the 50-day moving average of €352.84 and the 200-day moving average of €389.03, with a relative strength index of 38.2 — technically oversold but still lacking a clear reversal signal.

The foundation beneath that price weakness is anything but shaky. In the quarter ended March 2026, Microsoft generated $82.9 billion in revenue, an 18% increase from a year earlier. Operating income climbed 20% to $38.4 billion, while earnings per share jumped 23% to $4.27. The Intelligent Cloud segment, the primary growth engine, expanded 30% to $34.7 billion, and Azure itself notched a 40% gain. Total cloud revenue reached $54.5 billion, and commercial remaining performance obligations — a proxy for future revenue — soared 99% to $627 billion, signaling robust demand visibility.

That demand has not insulated the stock from macro headwinds. The Federal Reserve’s two-day meeting on June 16–17 and the release of May retail sales data on the 17th loom as critical catalysts for rate-sensitive tech names. Higher-for-longer interest rates compress valuation multiples, while a dovish pivot would relieve pressure. For Microsoft, the outcome will help determine whether the market treats it as a defensive software stalwart or a high-beta AI infrastructure play — a split identity that has kept the shares oscillating between short-term moving averages and 52-week lows.

Amid the macro uncertainty, Microsoft has maintained its quarterly dividend at $0.91 per share, payable on September 10, 2026, with an ex-dividend date of August 20. Combined with stock buybacks, the company returned $10.2 billion to shareholders in the latest quarter. The payout signals financial discipline even as the company pours more than $190 billion into AI infrastructure this fiscal year.

Should investors sell immediately? Or is it worth buying Microsoft?

That spending spree was on full display at the Build 2026 developer conference in early June, where Microsoft unveiled the MAI Model Family, a proprietary suite of AI models designed to reduce reliance on external partners and run more cost-efficiently on Azure. The company also introduced Microsoft Scout, a persistent Autopilot agent that autonomously manages and prioritizes tasks within Microsoft 365, and Work IQ APIs, an intelligence layer that deepens analytics of internal workflows.

Monetization of these tools is already taking shape on the pricing front. Microsoft launched the E7 “Frontier Suite,” a new enterprise package priced at $99 per user per month — a 65% premium over the existing E5 tier. The suite bundles advanced security, compliance, and identity features and serves as the foundation for Microsoft Agent 365, the company’s platform for AI-driven enterprise workflows. The message to corporate customers is explicit: deploying AI agents inside an organization will come at a significantly higher cost.

The next major test for that strategy is the fourth-quarter earnings release for fiscal 2026, expected on July 29 — a date Microsoft has not yet officially confirmed. Analysts will focus on average revenue per user in the commercial Microsoft 365 cloud and whether the heavy infrastructure investment is beginning to translate into measurable top-line acceleration. Until then, the stock remains caught between a robust operating story and the macro forces that continue to weigh on growth valuations.