Microsoft (MSFT) shares have tumbled approximately 20% year to date, marking a sharp pullback from the highs seen last October. The steep decline was triggered by the company’s fiscal second-quarter 2026 earnings report on Jan. 28. The stock closed at $481.63 that day, only to plummet to $433.55 the following session—a single-day drop of nearly 10%.
In contrast, the SPDR S&P 500 ETF (SPY) has edged up about 0.7% over the same period, underscoring a crisis of confidence in the tech giant.
While Microsoft reported a solid 17% year-over-year revenue increase for the quarter, investors zeroed in on two major concerns: soaring capital expenditures and the company’s deepening ties with OpenAI.
During the earnings call, CFO Amy Hood revealed that “approximately 45% of our commercial remaining performance obligations balance is from OpenAI.” With the company’s total backlog standing at $62.5 billion, according to its 10-Q filing, that means nearly $30 billion in future revenue is tied to OpenAI’s trajectory. Many shareholders view this as a significant risk—any disruption to OpenAI’s technology roadmap or business model could directly impact Microsoft’s top line.
Adding to the unease is Microsoft’s aggressive spending on AI infrastructure. Just before the earnings release, the company unveiled its in-house AI inference accelerator, Maia 200, claiming it is 30% cheaper than comparable AI chips on the market. But that announcement was largely overshadowed by the negative sentiment surrounding the earnings report.
Amid the gloom, Goldman Sachs analyst Gabriela Borges and her team have struck a decidedly bullish note, reiterating a “buy” rating on Microsoft and maintaining a $600 price target—implying upside of roughly 38% from current levels. Borges argues that the market is overestimating short-term risks while underestimating Microsoft’s long-term AI infrastructure strategy.
Goldman also flagged several downside risks: revenue from the OpenAI partnership could fall short of expectations; the internal silicon ramp could take longer than anticipated; AI investments might continue to exceed forecasts; key leadership changes could occur; and a shift toward custom software could pressure traditional application businesses. Any of these factors could slow the stock’s recovery.
Microsoft’s recent struggles reflect broader market anxieties over AI hype and capital efficiency. But Goldman and other bullish voices are choosing to focus on the company’s technological moat and valuation upside. The $600 target implies confidence in Microsoft’s self-developed chips, improving Azure margins, and sustained AI demand. For investors, the key question remains: Will the OpenAI partnership prove to be a double-edged sword—or the very thing that carries Microsoft through the AI era?
