Key TakeawaysMSFT shares have tumbled nearly 32% since reaching an all-time peak of $542.07 in October 2025, marking the worst six-month performance since 2009.UBS downgraded its price target from $600 to $510 for the next 12 months, pointing to lackluster Microsoft 365 Copilot uptake among enterprise customers.Shares settled at $371.04 on Wednesday — the lowest closing price since April 22, 2025 — putting the stock on track for its steepest quarterly loss since late 2008.Investors across global markets view the 15 million Copilot seat count as underwhelming, with revenue acceleration failing to materialize as anticipated.Yet the company continues to deliver strong fundamentals, posting 17% year-over-year revenue growth last quarter while trading at its most attractive P/E ratio in a decade.Microsoft’s 2026 has been nothing short of punishing. Shares have declined 20% since January, placing the tech giant dead last among the Magnificent Seven stocks. This represents a dramatic reversal from the $542.07 peak achieved merely five months earlier.Microsoft Corporation, MSFTThe statistics paint a grim picture. The company is headed toward its steepest quarterly decline since the fourth quarter of 2008, its worst first-quarter performance in company history, and its most prolonged monthly slide since a six-month descent that concluded in February 2009. These are historic losses by any measure.UBS analysts lowered their 12-month valuation target for Microsoft this Tuesday, dropping it from $600 down to $510. While maintaining their Buy recommendation, their commentary was unmistakably critical. The story surrounding Microsoft 365/Copilot “needs to improve in order for the stock to really re-rate higher,” they emphasized.The challenge centers on a single offering: Copilot.Microsoft’s artificial intelligence tool, integrated throughout its Microsoft 365 platform, was expected to drive explosive growth and validate the stock’s elevated multiple. Yet current seat sales — the company’s metric for paid subscriptions — total just 15 million. Market participants globally believe this figure falls short of expectations. According to UBS, the commercial M365 revenue trajectory “should be bending higher and yet it’s not.”Microsoft has attempted to address these concerns. Company representatives informed UBS that Copilot underwent a complete reconstruction over the past year incorporating enhancements from both OpenAI and Anthropic, with Q2 engagement metrics described as “very good.” However, engagement and revenue acceleration are distinct metrics, and Wall Street remains fixated on the financial performance.Azure Momentum Under ScrutinyBeyond Copilot, another worry has emerged. UBS observers noted Microsoft expressed strong confidence regarding Azure demand — particularly traditional CPU-based workloads — yet declined to provide Azure revenue projections past the current March quarter. Analysts also highlighted that a GPU capacity reallocation, which already pressured shares following Q2 results, may continue hampering Azure’s expansion in upcoming periods.This represents a significant concern for a division that just reported 39% year-over-year cloud revenue growth.Regarding Copilot strategy, Microsoft has adopted a partnership-driven approach to maintain competitiveness. The company is jointly developing Copilot Coworker with Anthropic and integrating it into Copilot without additional customer charges. UBS described this as “the best possible chess move,” enabling Microsoft to accelerate innovation without shouldering the entire development burden internally.Market Valuation Reaches Multi-Year LowsThe dramatic selloff has compressed Microsoft’s valuation metrics to levels unseen in years. The stock’s price-to-earnings multiple has reached one of its lowest points across the previous decade.For perspective, Microsoft consistently commanded approximately 35 times earnings throughout recent years — a substantial premium relative to broader market indices. The S&P 500 presently trades around 24 times earnings. Whether Microsoft merits such a premium remains contentious, though analysts covering the company maintain the current discount appears excessive considering underlying business strength.Revenue expanded 17% year-over-year in the most recent quarter. Street consensus projects 16% growth for the upcoming quarter and comparable performance for the full fiscal year. These figures don’t suggest a company experiencing fundamental distress.Since October 2025’s record high, Microsoft has surrendered approximately $1.28 trillion in market capitalization. The company now ranks fourth among America’s largest corporations by market value, trailing Nvidia, Apple, and Alphabet.The post Microsoft (MSFT) Stock Plunges 32% from Peak — Has It Hit Bottom? appeared first on Blockonomi.