it’s a long way down. And down Microsoft went, after their latest earnings report. Double-digit tumble. Investors getting all twitchy about capital expenditure and slower growth. Honestly, it’s always the growth, isn’t it? Everyone wants endless, exponential growth. It’s exhausting just thinking about it. They’re now trading at an 8-month low. Which, let’s be real, is a fancy way of saying “slightly bruised ego.”
Why the Sudden Mood Swing?
On the surface, things looked…fine. Revenue up 17% to $81.3 billion. Operating income soaring. An operating margin of 47%? Someone’s doing something right. Azure, their cloud division (where all the AI magic happens), was up 39%. So, numbers were good. Very good, even. But investors? They’re a fickle bunch. Like exes at a wedding.
They got a bit cross about flat sequential revenue guidance for the next quarter – $80.65 to $81.75 billion. Apparently, 15-17% growth isn’t enough anymore. The nerve! And they’re worried about the cost of goods going up 22-23%. As if running a global tech empire is cheap. Honestly, the audacity. They also said capital expenditure would dip a bit, which, you know, happens. It’s called normal variability. But people fixate on these things. It’s baffling.
Free cash flow is declining as they ramp up spending, and consumer growth is slowing. Probably just the economy being…the economy. But let’s not talk about that. It’s depressing. They also admitted they’re still struggling with cloud capacity, hence the spending. Their remaining performance obligations are at $625 billion, which is good. A lot of future demand. Still, the market decided to shave off over $400 billion from their market cap. A bit dramatic, don’t you think?
So, Should You Buy? (Asking for a Friend)
Microsoft stock was already wobbling before this report. People are starting to question the whole AI strategy. Are we in a bubble? Will robots steal our jobs? The usual existential dread. The stock is down over 20% from its peak last October. Which, frankly, feels…a bit much. It’s like punishing a company for being successful. Rude.
But here’s the thing. They’re still expected to deliver mid-to-high teens revenue growth. And the price-to-earnings ratio is down to 25, based on 2026 estimates. Which makes them cheaper than the S&P 500. Not that I’m advocating for reckless spending, but…just saying. They still have a lot going for them. Azure is still growing at a ridiculous rate – 37-38% for the current quarter. Honestly, it’s almost unfair.
So, are the worries overblown? Probably. At the current valuation, the stock looks like a strong buy. Unless you’re one of those people who enjoys watching money sit on the sidelines. Which, you know, is a valid life choice. But boring. Very, very boring.
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2026-01-30 17:54