It seems like not so long ago when many celebrated Microsoft’s commitment to Azure. The decision of Satya Nadella Focusing on cloud computing soon began to translate into good financial results, propelling the Redmond company to achieve record revenue figures. But there was something more relevant in that movement: the realization that it could generate enormous benefits beyond Windows. That strategy, started in 2014ended up marking a before and after that became especially visible in 2019, when the firm reached for the first time a market capitalization of one trillion dollars.
However, not even the most long-term oriented strategists, like Nadella, are free from errors. Microsoft has been chaining questionable decisions for some time that have ended up having a direct impact on its quarterly results. Specifically, the company has lost almost a quarter of its value in just three months. To put it in context, we are talking about its largest quarterly drop since the 2008 financial crisis. A decline of this magnitude, logically, does not go unnoticed.
From cloud leadership to a strategy under pressure
If we want to understand why the story has gone wrong, we have to start with the most obvious: the market has reacted harshly and, above all, selectively. In the first quarter of 2026, Microsoft lost about 23% of its stock market value, according to CNBCwhile the Nasdaq lost around 7%. It is not a minor movement, among other things because we are talking about a drop of a magnitude that has not been seen in almost two decades. This gap compared to the rest of the sector begins to point out problems that go beyond the general context.
For a time, the commitment to OpenAI was seen as one of Microsoft’s great strategic successes, and it is not difficult to understand why. The company has invested around 13 billion dollarss to integrate this technology into Azure and into products like Copilot, which allowed it to place itself in a very advantageous position in the race of the artificial intelligence. However, with the passage of time we have also begun to see the other side of that decision: a very high technological dependence and a growing pressure to justify that deployment.
As the months have passed, that close relationship has also quietly begun to change. Although Azure remains a key partner for OpenAI, the company led by Sam Altman has started to open your infrastructure to other actors to sustain the growth of its models, which increasingly require more computing capacity and energy. This does not break the alliance, but it does change its meaning, because Microsoft no longer concentrates with the same clarity all the strategic advantage that it had achieved in the first phases of the agreement.
If we go down to the field of the product, where all these bets should materialize, the case of Copilot is especially illustrative. Microsoft has tried to make this assistant the axis of its new value propositionintegrating it into Microsoft 365 and a good part of its ecosystem, but the adoption It is not going at the expected pace. According to The Information, almost no one uses Copilot. What we have seen is that bringing artificial intelligence to the daily life of companies is more complex than it seemed on paper.
Added to all this is a tension that is not always seen, but is very present in the backroom of this race: that of how to distribute resources in an environment of growing demand. Microsoft is investing massively in infrastructure to sustain the rise of AI, but at the same time it has to decide how it allocates that capacity between Azure and its own services. In January, CFO Amy Hood came to point out that Azure’s growth in the December quarter would have been even greater if the company had allocated more chips to the cloud instead of distributing some of that capacity among services like Copilot.
Attrition is not limited to artificial intelligence, and that should also be taken into account. Also this year we have seen notable drops in income and in various areas of the Xbox ecosystemin a context also marked by previous price increases in Game Pass and on the consoles. It may seem like a minor front next to Azure or Microsoft 365, but it helps complete the picture of a company that has been opening too many flanks at the same time. What we have seen is that even in areas where it had a consolidated position, Microsoft is finding it more difficult to keep pace.
Put all these pieces together, and what begins to emerge is an increasingly evident disconnect between Microsoft’s operational strength and the way the market is valuing its strategy. The company remains the fourth most valuable on the planetcontinues to grow, with revenue up close to 17% year-on-year in its last reported quarter and with Azure advancing 39% in the December quarter, but that strength is not translating to its price or valuation.
Images | Xataka with Nano Banana 2
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