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News Topical, Digital Desk : Tech giant Microsoft is currently facing a dual challenge, with its stock heading for its worst quarter since the global financial crisis of 2008. On the one hand, the company is under pressure to invest heavily in AI and deliver returns, while on the other, growing competition from new AI companies is raising investor concerns.
A sharp drop in the stock Microsoft's stock has fallen nearly 25% in the first quarter of 2026, marking its biggest decline since 2008. In the fourth quarter of 2008, the stock had fallen 27%. The current decline is the steepest among the "Magnificent Seven" tech companies, with the average decline for the rest being much less. The stock continued its decline on Friday, trading in the red for the fourth consecutive day.
AI Investments Become a Cause of Concern
Microsoft is rapidly increasing spending on AI infrastructure, but investors are questioning when this will translate into significant revenue growth. Estimates indicate that the company's
capital expenditure (Capex) could reach $146 billion in 2026, an increase of approximately 66% from $88 billion in 2025. It is estimated that this expenditure could increase further in 2027 and 2028. This significant investment is worrying investors, especially since growth is not as rapid.
Growing Threat from AI Companies
Companies like OpenAI and Anthropic are developing AI tools and agents that could challenge Microsoft's traditional software business. Experts say customers may migrate directly to AI companies, which could put pressure on Microsoft's business and profits. Microsoft's cloud business, Azure, a key growth engine for the company, has seen growth slow in recent quarters. Meanwhile, the company's AI product, Copilot, has not yet achieved the desired popularity, forcing the company to revise its AI strategy.
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