Microsoft’s Pivotal Week: Earnings to Test AI Strategy and Valuation

Microsoft Corporation enters a critical phase this week as it prepares to release its Q2 FY 2026 financial results. The report arrives at a significant juncture for the stock, which is undergoing a reassessment following a notable correction and a period of intense AI-driven enthusiasm. The central question for investors is whether the growth trajectory of its cloud and artificial intelligence segments can justify the recent pullback and potentially reverse it.

The recent decline has materially altered Microsoft’s valuation. Shares currently trade at approximately 28.5 times forward earnings, a discount to the five-year average multiple of 31.5. Before the correction began in October, the forward price-to-earnings ratio stood above 32. On a trailing earnings Read more...