Microsoft continues to dominate a tech industry that is slowly bouncing from Fearful trading territory, as can be seen with Nasdaq exploding back to its all-time highs – AI themes are trending again, with fears of other sectors being affected by higher Energy prices.
Its fundamental strength is still anchored by a commanding market share in Enterprise Software (Office 365) and a robust #2 position in Cloud (Azure), which recently saw a stellar 39% year-over-year revenue growth.
Despite recent selloffs in the MSFT stock, earnings growth remains impressive; in its most recent reported quarter (Q4 2025), Microsoft delivered a 24% increase in adjusted EPS ($4.14$), significantly beating analyst estimates.
What scared investors was the immense spending projections for AI infrastructures, which hit at a time when Market sentiment took a turn to the downside.
Indeed, recent bearish earnings reactions have been a mix of pessimism over AI monetization—specifically with 15 million paid Copilot seats—and caution regarding massive capital expenditures on GPUs at a time when costs are exploding.
Microsoft is Open AI’s primary cloud partner and they just announced a restructuing in the way they operate – Reactions have been more optimistic than pessimistic, but the real response will be seen tomorrow. You can read more about it right here.
Overall, Microsoft remains a Cash Cow, returning over $12 billion to shareholders last quarter through buybacks and dividends, so it remains a relatively attractive investment on large drops.
Keep in mind that general appetite for Tech and AI remain the primary driver of Mag 7 attraction.
Bubble fears persist, but it still seems that the top is not quite there yet – and compared to 2000, profit-numbers are more than real: they are record-breaking!
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