By Janet H. Cho

Microsoft stock is tracking its worst six-month stretch since 2009 and facing its worst start to a year ever.

The shares were down in midday trading on Wednesday after an analyst note said its 365 Copilot has "disappointed" and isn't being embraced as quickly as anticipated.

The stock was trading at around $371 at 1:30 p.m. Eastern time, down 0.4% and on pace for its largest quarterly decline since the fourth quarter of 2008 and its worst three-month start to a calendar year on record, according to Dow Jones Market Data. The stock is also on pace for its longest monthly losing streak since the six-month losing streak ending February 2009, and down nearly 32% from its all-time closing high of $542.07 on Oct. 28, 2025.

UBS Global Research analysts on Tuesday cut their 12-month price target to $510 from $600. UBS said that while the stock remains a Buy, the narrative around Microsoft 365/Copilot "needs to improve in order for the stock to really re-rate higher."

Microsoft told UBS that Copilot, an AI-powered productivity tool, was rewritten over the past year to take advantage of improvements from OpenAI and Anthropic and that it was happy with the progress, citing "very good" Copilot usage in the second quarter.

But UBS said that the consensus among investors in Asia is that 365 Copilot has "disappointed to date," and that subscriptions, which the company calls "seat sales," should be greater than the 15 million it has reported.

The commercial M365 revenue growth curve "should be bending higher and yet it's not," the note said about the sentiment of customers in Asia.

UBS said that most U.S. investors also share this view, which has "become a material weight on the stock."

Despite investor skepticism about Copilot, Microsoft told UBS that Copilot usage picked up in its December quarter, saying that while the company needs to innovate faster, it can be a successful "fast follower."

For example, even though it already has its own Agent Mode, Microsoft decided to co-develop Copilot Coworker with Anthropic and embed it into Copilot at no extra cost to keep those customer relationships. UBS said that was smart, because Microsoft "had to move fast and this was the best possible chess move."

"Frankly, we respect Microsoft's innovation culture, whereby it is willing to partner with others that may be innovating faster," UBS said.

UBS added that while "Microsoft sounded very bullish about Azure demand, including core CPU-based demand that serves as a good read to the likes of Snowflake and Datadog," the company offered no signal about Azure's revenue growth and capacity additions beyond the March quarter, and the analysts sensed that the GPU shift that weighed on its stock after its December quarter could persist, "throttling Azure growth."

Barron's recently named Microsoft a stock pick, saying it hasn't been this cheap in a decade.

Microsoft stock has lost nearly $1.28 trillion in market value since its all-time high, Dow Jones Market Data said. Eight other U.S. companies currently have market caps greater than $1.279 trillion: Nvidia, Apple, Alphabet, Microsoft, Amazon, Broadcom, Meta, and Tesla.

Write to Janet H. Cho at janet.cho@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 25, 2026 13:55 ET (17:55 GMT)

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