MSFT stock sits 21% below its October peak, trading at 24x earnings, levels last seen in 2022 and 2018.
Microsoft shares have declined 12% year-to-date and 21% from their October high, trading at 24 times earnings and 21 times forward earnings. The valuation marks a multi-year low, comparable only to levels seen during the 2022 bear market and 2018 pullback.
Investor concerns over rising capital expenditures on artificial intelligence, slowing AI cloud growth, and declining free cash flow have weighed on the stock. Unlike peers such as Amazon and Nvidia, Microsoft has failed to rebound from its first-quarter retreat, partly due to its partnership with OpenAI, which faces profitability questions.
The stock’s recent underperformance follows a three-year bull run that left valuations stretched at the end of 2025, prompting profit-taking across big tech.