Many investors have been kicking Microsoft (NASDAQ: MSFT) to the curb. It's down by almost 20% year to date as fellow tech stocks continue to rally. The State Street Technology Select Sector SPDR ETF's 28% year-to-date rally truly captures how much Microsoft has fallen in the eyes of many investors.
However, it may be too early to count Microsoft out, especially since its strong fundamentals remain intact.
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Perhaps some growth investors have given up on Microsoft because it's not doubling revenue year over year like some of the top-performing AI stocks. However, it's still gaining ground on its peers thanks to AI, which has translated into steady financial growth.
Revenue inched up by 18% year over year in Microsoft's fiscal 2026 third quarter. CEO Satya Nadella said the company's AI business reached an annual revenue run rate of $37 billion, a 123% year-over-year increase. Microsoft Cloud once again remained the main growth driver, and it was up by 29% year over year.