Down 22% in 6 Months, Is Microsoft Stock a Buy?

After performing good for the archetypal six months oregon truthful of 2025, shares of Microsoft (NASDAQ: MSFT) started moving successful the incorrect absorption successful the 2nd fractional of the year. And the institution has shown nary signs of a rebound truthful acold successful 2026. Microsoft's shares are down by 22% implicit the past six months.

Should investors see purchasing the banal now, oregon volition the institution stay southbound for the foreseeable future? Let's find out.

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The company's fiscal results haven't been bad. In the 2nd 4th of its fiscal 2026, ended connected Dec. 31, gross accrued by 17% twelvemonth implicit twelvemonth to $81.3 billion. Microsoft's unreality concern remains the prima of the show. Azure gross climbed 39%, good up of the wide business. Adjusted net per stock were up 24% to $4.14. So far, truthful good.

However, absorption is spending a batch to substance its unreality and artificial quality ambitions. The company's superior expenditures (capex) for the play were $37.5 billion, up astir 66% twelvemonth implicit year. But Azure maturation seems to beryllium stabilizing, and the company's 2026 third-quarter guidance provides further grounds of that, with a projected summation of 37% to 38% (in changeless currency).

The occupation isn't that Microsoft isn't performing well. It's that the precocious maturation driven by Azure (given its capex spending) was already baked into the banal price, truthful thing that looks "average" by the company's lofty standards simply isn't bully enough. The marketplace wanted to spot accelerating growth. That's 1 of the biggest reasons the banal has been moving successful the incorrect direction.

The mediocre show implicit the past six months has made the banal overmuch much reasonably valued. The institution is presently trading astatine 24.7 times guardant earnings, which is precise tenable compared to its peers successful the "Magnificent Seven" -- and for that matter, versus the manufacture mean of 24.5.

Even with slowing growth, Microsoft remains 1 of the leaders successful unreality computing and AI, acknowledgment to its heavy endeavor relationships and its concern with OpenAI, a marketplace leader. The institution besides benefits from a beardown competitory vantage from switching costs.

And adjacent if the banal is owed for a sell-off, fixed stabilizing maturation successful its Azure division, Microsoft looks precise charismatic to semipermanent investors astatine existent levels.