Microsoft stock is on pace for its worst month since 2000. <\/p>\n
The company has been squeezed by capex-spending concerns, as well as a software pullback. <\/p>\n
Fellow hyperscaler Oracle has also faced similar issues \u2014 and similar skepticism from stock investors. <\/p>\n
When it comes to the elite group of AI stocks known as the Magnificent 7, the winners are pretty well-established. <\/p>\n
You have Alphabet<\/a>, which has established itself as the latest and greatest contender<\/a>, with the recent stock returns to back it up. There’s also Nvidia<\/a>, which has maintained its spot as king chipmaker. <\/p>\n But what about the worst performer? <\/p>\n Apple has struggled for a while with the perception that it’s lagging on AI, and is spending its way into relevance through partnerships. Meta has come under pressure<\/a> as the least diversified group member \u2014 it’s basically AI or bust. <\/p>\n That perhaps makes the biggest laggard right now \u2014 Microsoft \u2014 a surprise. It has a well-diversified business and a thriving cloud-computing platform. It has its own AI agent in the form of Copilot. <\/p>\n But check out these recent performance stats. Grim, to say the least: <\/p>\n Microsoft stock is pacing for a 18% decline in June, which would be its worst month since the dot-com heyday of 2000 <\/p>\n Shares are down 24% year to date so far, the worst in the Mag 7 <\/p>\n Roughly $857 billion in market value has been erased over the same period <\/p>\n The stock is now trading near its lowest level since 2023 <\/p>\n With the company’s position at the bottom of the Mag 7 confirmed, here are a few additional considerations: <\/p>\n Microsoft’s unique double whammy <\/p>\n The company faces a set of circumstances that sets it apart from the rest of the Mag 7. It’s currently contending with both: (1) investor pushback against heavy AI-capex spending<\/a> and (2) jitters about how AI will disrupt software. After all, despite its newfound AI ambitions, Microsoft remains the world’s biggest software company. <\/p>\n This has created a situation where progress on one front can be overruled by trouble on another. Diversification is suddenly not so appealing when you’re feeling pressure across multiple businesses. <\/p>\n Valuations are at multi-year lows <\/p>\n Just last week, Microsoft’s forward P\/E ratio fell to roughly 21 times, its lowest level in about three years. Traders are grappling with whether this is an appropriate re-rating, or if now is the time to buy at a depressed valuation. Speaking of which\u2026 <\/p>\n Michael Burry is buying <\/p>\n The famed “Big Short” investor<\/a> is one person who likes Microsoft valuations at current levels. He wrote in a Substack post<\/a> last Thursday that he’d bought call options on the stock that will pay off if shares rise into the low $700s by 2028. Ever the market influencer, Burry’s post helped spur a 6% rally last Friday. <\/p>\n Oracle is making sure Microsoft isn’t alone <\/p>\n They say misery loves company. And in this case, fellow software titan Oracle<\/a> has been feeling the same pain as Microsoft. In fact, their stock charts for 2026 look somewhat similar. <\/p>\n Also a major hyperscaler, Oracle is battling with the same dual issues as Microsoft. As the specter of software-industry disruption looms, Oracle is also feeling investor pushback against capex spending. <\/p>\n