The numbers are staggering, but the market is asking a different question: at what cost?
Microsoft’s stock has shed roughly 14% since the start of 2026, and on Thursday it took another hit, closing in Germany at €357.65 — a 23% slide from last summer’s 52-week high. The immediate trigger was a sector-wide selloff sparked by ServiceNow’s disappointing quarterly results, which revived fears that traditional software-as-a-service players are being squeezed by AI-native alternatives. For a company as deeply embedded in the enterprise software ecosystem as Microsoft, that concern cuts close to home.
Cybersecurity Deepens the OpenAI Alliance
Yet beneath the market noise, Microsoft and OpenAI have been quietly expanding their partnership. On April 23, 2026, the two companies unveiled “Trusted Access for Cyber,” a program that gives Microsoft exclusive access to OpenAI’s most advanced AI models for cybersecurity applications. The technology is designed for real-time vulnerability detection and automated threat response, while Microsoft’s “Secure Future Initiative” will in turn protect OpenAI’s own systems and shared enterprise customers.
The infrastructure underpinning this effort is immense. Microsoft’s global security stack already processes over 100 trillion signals daily, and that capacity will now be used to secure the environments where AI models are trained and deployed.
The Price of Ambition
Microsoft’s push into “agentic AI” — autonomous agents that can independently execute tasks — is accelerating. On April 22, the company introduced the “Frontier Partner” certification for sales partners deploying these agents, and from May 1, 2026, the Microsoft 365 E7 suite and the “Microsoft Agent 365” control platform will be generally available.
But these ambitions come with a hefty price tag. Analysts expect capital expenditures of between $110 billion and $120 billion for fiscal 2026, almost entirely directed at expanding Azure’s AI infrastructure. That eye-watering figure is precisely what has investors on edge.
A concrete sign of progress arrived with CEO Satya Nadella’s announcement that the Fairwater data center in Mount Pleasant, Wisconsin, will begin operations earlier than planned. The facility spans 1.2 million square feet, connects hundreds of thousands of Nvidia GPUs into a single cluster, and represents a total investment of more than $7 billion in the state. The message is clear: the capacity bottlenecks that have constrained Azure’s growth may be easing sooner than feared. Microsoft has not yet confirmed whether workloads are already running on the site, but the accelerated timeline is a positive signal.
Should investors sell immediately? Or is it worth buying Microsoft?
Cloud Strength Meets Investor Skepticism
The operating picture remains robust. Azure grew 39% year-over-year in the second fiscal quarter of 2026, and Microsoft’s total contractual backlog stands at $625 billion. Yet the market punished the stock by nearly 10% on that earnings day — even though revenue and profit both beat expectations. The deceleration of one percentage point in Azure’s growth rate from the prior quarter was enough to spook investors.
The stock had recovered 21% from its late-March low before the ServiceNow shockwave interrupted the rebound. The relative strength index of 28 suggests the shares are technically oversold, but whether that triggers a stabilization depends entirely on what comes next.
The $281 Billion Question
All eyes are now on April 29, 2026, when Microsoft reports fiscal third-quarter results after the market close. Analysts expect adjusted earnings per share of $4.04, an increase of nearly 17% from the same period last year. The company has beaten consensus estimates in each of the past four quarters.
The most closely watched metric will be the backlog. While the total of $625 billion looks impressive, $281 billion — or 45% — comes from OpenAI alone. Critics question how firm that portion of the backlog really is, and Microsoft will need to address those doubts head-on.
GuruFocus estimates the stock’s fair value at roughly $542, about 23% above the current price. The price-to-earnings ratio of 26 sits well below the five-year average of 34, and 41 of 49 analysts rate the shares a “Strong Buy.” The valuation is undeniably attractive. Whether the market agrees on April 29 depends largely on what Nadella has to say about Azure’s growth trajectory and the durability of that OpenAI-linked backlog.
A voluntary severance program affecting roughly 7% of Microsoft’s U.S. workforce adds another layer of uncertainty, as does the broader question of whether billions in infrastructure spending are already translating into measurable returns — or will continue to weigh on margins for quarters to come.
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