Quick Read
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Azure grew 43%, the commercial backlog surged 84% to $678B, yet MSFT trades at just 28x earnings, making it a rare setup for patient buyers.
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MSFT gained just 4% year to date versus QQQ’s 22%, with rising rates, runaway AI capex, and investor rotation all compressing its multiple.
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October earnings are the trigger. Azure at or above 45% growth reclaims $500, while a miss on either Azure or the $175B capex plan sends shares to $475.
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Just released. Our analysts combed the entire stock market and named the ten best stocks to buy right now, and Microsoft didn’t make the cut. Enter your email to see the names that beat MSFT. The report is free. Enter your email and see if any of your stocks made the cut.
Microsoft (NASDAQ:MSFT) settled at $498 on September 22, 2026, down 0.72% on a session when the Nasdaq-100 proxy QQQ closed up 0.81% at a record. The $500 handle keeps slipping through the stock’s fingers.
Microsoft is up 3.63% year to date and down 2.4% over one year, while QQQ has returned 21.67% and 24.12% over the same windows. The largest enterprise software company on earth is anchoring an index that keeps making new highs without it. Fundamentals don’t explain that gap.
Immediate News Is Smaller Than It Sounds
Reports this month describe another round of Microsoft job cuts reaching beyond gaming into cloud, AI, marketing, and research, along with a decision to move development of the next Halo title to Activision studios inside the company.
Put in context, this continues a gaming restructuring first announced in July that targets roughly a fifth of the division and is most of the way through. At a company doing $331.84 billion in annual revenue, a few hundred roles is housekeeping. It is not why the bid disappeared.
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Three Real Pressures on the Multiple
Start with rates. The ten-year Treasury sits at 4.96%, near a 19-year high, and the Federal Reserve raised the funds rate to 4.00%, its first hike since 2023. Long-duration megacaps carry the most present-value pain when the discount rate lifts.
Second, the cost argument. An August note from a major bank warned that hyperscaler AI capital spending is outrunning AI revenue, and Microsoft’s capex line is the exhibit prosecutors keep pointing to.
