How Low Can Microsoft Stock Go?

Core Insights - Microsoft (MSFT) stock has experienced a significant drop of 10% in a single day, raising concerns about Azure cloud growth, increasing AI costs, and reliance on OpenAI [2] - The company is valued at $3.2 trillion with a revenue of $305 billion, currently trading at $433.50 [3] - The stock's high valuation, with a P/E multiple of 27.0 and a P/EBIT multiple of 21.6, suggests it may be relatively expensive [4][7] Performance Analysis - Microsoft stock has shown resilience during past economic downturns, outperforming the S&P 500 in terms of recovery speed and extent of decline [5] - Historical performance indicates that MSFT stock decreased by 37.6% from a peak of $343.11 on November 19, 2021, to $214.25 on November 3, 2022, while the S&P 500 saw a peak-to-trough drop of 25.4% [8] - The stock fully recovered to its pre-crisis peak by June 15, 2023, and reached a high of $542.07 on October 28, 2025, before currently trading at $433.50 [8] Economic Context - Over the last 12 months, Microsoft has achieved a revenue growth of 16.7% and an operating margin of 46.7% [7] - The company maintains a low Debt to Equity ratio of 0.02 and a Cash to Assets ratio of 0.13, indicating strong liquidity [7] Historical Downturns - During the 2020 COVID pandemic, MSFT stock fell by 28.2% from a high of $188.70 on February 10, 2020, to $135.42 on March 16, 2020, compared to a 33.9% decline for the S&P 500 [9] - In the 2018 correction, the stock decreased by 18.6% from $115.61 on October 1, 2018, to $94.13 on December 24, 2018, while the S&P 500 dropped by 19.8% [9] - The stock plummeted by 59.1% during the 2008 global financial crisis, from $37.06 on November 1, 2007, to $15.15 on March 9, 2009, compared to a 56.8% decline for the S&P 500 [9]