Microsoft’s Stock Revival Hinges on Showing Growth From AI Binge

Microsoft Corp. has plowed tens of billions of dollars into artificial intelligence. With its stock struggling, the key question is how quickly those investments can prove to be successful.

The worst performer among the Magnificent Seven since hitting a record in July, Microsoft shares have stumbled under the weight of ambitious spending and signs that adoption of its AI services has been slower than hoped. The cooling hype risks leaving the stock vulnerable, given it trades at an elevated multiple.

“The market is coming to a realization that AI adoption will take longer, and that expectations for near-term returns have gotten out of line,” said Tim Pagliara, chief investment officer at Capwealth Advisors. While “Microsoft is really pushing AI, it has to prove the concept at a time when it also has huge capex plans and the stock is fully valued by historical standards.”

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