MSFT stock was down more than 24% year to date early Thursday, leaving Microsoft Corp. on track for its worst first-half performance since 2000. That slide has put shareholders in the weakest position the stock has faced in decades, even as analysts still see room for a rebound.
Microsoft Corp. at 20.2 Times
20.2 times forward earnings is Microsoft’s current valuation, and that is its lowest PE ratio since late 2016. The multiple shows that the stock has been marked down even while the company remains tied to AI, Copilot, Windows and Xbox, a mix that has not prevented a sharp reset in market expectations.
53 out of 56 analysts still rate Microsoft stock Buy or higher, and three analysts rate it Hold. The average price target is $561.39, implying 53% upside from Monday’s closing price. That gap between Wall Street’s target and the stock’s year-to-date drop is the clearest sign that the selloff has been driven more by positioning than by a full break in the long-term case.
Micron and Western Digital
Micron reported blowout quarterly results on Wednesday, and chip stocks such as Intel, Micron and Western Digital have risen nearly four times in the first six months of the year. Microsoft moved the other way, weighed by a broader selloff in software stocks and rising competition, while Alphabet’s Google Gemini advances helped lift GOOGL shares and Anthropic kept expanding its AI offerings.
Early Thursday, Microsoft was among the most-discussed names on Stocktwits, and retail sentiment for MSFT flipped to bearish from bullish the previous day. Microsoft Corp. was also the worst-performing stock in the Magnificent Seven group, a split that left traders choosing between the semiconductor rally and a software leader that has lost momentum. If that gap persists, the market will keep treating Microsoft less like a momentum name and more like a valuation test.
Microsoft has reportedly explored restructuring its Xbox business and is considering integrating China’s low-cost DeepSeek models into its Copilot platform. Whether Microsoft turns either move into an actual business change is the next issue for traders: the stock already reflects weaker sentiment, but the company’s response to competition will matter more than the headlines alone.
