The U.S. stock market in the first half of 2026 gave investors a thrilling roller-coaster ride. After a sluggish start to the year, a dip in March, and a sharp rebound in June, the S&P 500 index ultimately closed with an 8% gain. Although this performance is close to its long-term annualized average of 10%, the rally did not benefit all sectors. Some individual stocks not only failed to keep pace with the index but even recorded significant declines, with the movements of Microsoft and Meta Platforms drawing particular attention.
Tech giant Microsoft became one of the most disappointing blue-chip stocks in the first half of the year. By midyear, its share price had fallen more than 20% year-to-date, extending the weakness seen in the fourth quarter of 2025, and is now roughly 30% below its all-time high. A pullback of this magnitude has only occurred once in the past decade, during the recession fears that spread in early 2023, underscoring the current level of pessimistic market sentiment.
However, from a fundamental perspective, Microsoft’s operating data does not reveal a crisis of the same degree. In the most recent quarter, the company’s overall revenue grew 18%, diluted earnings per share rose 23%, and its artificial intelligence business stood out as a bright spot, with annual recurring revenue already exceeding $37 billion, representing a year-over-year growth rate of 123%. According to reports, Microsoft is planning to integrate its Copilot chatbot for both enterprise and individual users, and to introduce AI coding tools and new agent features to boost product adoption, with the new version expected to launch in August. This move is aimed at countering challenges from rivals such as Anthropic and OpenAI to the core Office business, and at alleviating previous market concerns that Copilot’s office automation effectiveness had fallen short of expectations and that its penetration rate remained low.
Nevertheless, capital market anxieties have already been reflected in the stock price. Microsoft has fallen 18% year-to-date, ranking last among the “Magnificent Seven” U.S. tech stocks. However, based on expected earnings for fiscal year 2027, its current price-to-earnings ratio is only around 19 times, a valuation level that appears quite attractive for an industry leader.
Another social media giant, Meta Platforms, also experienced a difficult first half of the year, with its share price falling nearly 20% from its peak. The main market concerns center on the effectiveness of its artificial intelligence strategy. Although its advertising business on platforms such as Facebook and Instagram has seen some optimization, investors do not appear to have given full recognition. Notably, Meta’s first-quarter revenue growth reached an impressive 33%, but strong results failed to reverse the stock’s downward trend.
From a valuation perspective, Meta’s current forward price-to-earnings ratio is approximately 17 times, which is not only well below the average for large-cap technology stocks but also represents a significant discount compared to the S&P 500’s forward P/E of 21.5 times. Based on its solid revenue growth and relatively low stock price, market analysts believe the stock also has rebound potential.
