Microsoft's stock price has taken a hit, falling by approximately 1.3% on June 29, 2026. This decline marks what is set to be the company's worst month in over 25 years. The stock's performance for the year so far has been equally lacklustre, with Microsoft down 22% in 2026.

The reasons behind this slump are tied to the company's significant investments in artificial intelligence infrastructure. As one of the biggest spenders on AI, Microsoft is struggling to translate these expenditures into tangible profits. Despite solid underlying financials, investors have yet to reward the company for its profligate spending, with concerns over an AI bubble starting to creep into the market.

In April, Microsoft tempered expectations for its Azure cloud-computing unit, forecasting "modest" growth this year. The company also announced plans to spend a substantial $190 billion on data centre capital expenditure, far exceeding what many analysts had anticipated. These moves have done little to alleviate investor concerns, with some drawing parallels between the current market and the dot-com bubble of 2000.

A glance at Microsoft's past performance reveals that June is not its only poor month. In December 2000, the company's stock price plummeted by nearly 25% as the dot-com bubble burst. February 2008 also stands out as one of the worst months for Microsoft's share price. While it remains to be seen whether the company can turn things around, the omens are not currently looking favourable.

The implications of this decline extend beyond Microsoft itself, with concerns over AI productivity and market bubbles continuing to dominate business headlines. The recent Federal Reserve survey has highlighted negligible AI gains, reigniting debates about the technology's true potential. As companies like Microsoft navigate these challenges, investors will be watching closely for signs that the company can break its cycle of poor performance and deliver on its promises.