How Big Could Microsoft Stock’s Next Fall Be?
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Microsoft (MSFT) stock returned 29.1% over the six months to November 11, 2026, compared with 2.9% for the S&P 500. At that close, the shares were 6.2% below their highest close of the past year, set a week earlier. Holders may be betting that Microsoft’s Azure cloud will keep growing fast enough to pay for its data center spending. If the market turns, how far has Microsoft stock fallen before, and how long did the shares take to come back?
How Far Has Microsoft Stock Fallen In Past Shocks?
At its worst, Microsoft stock fell 58% during the 2008-2009 Global Financial Crisis, compared with a 53% drop for the S&P 500. This marked the stock’s deepest fall in the market shocks since 2007. Across all 15 of those shocks, the stock fell 17.4% on average, slightly more than the 15.8% average for the S&P 500.
Recovery has usually taken a few months, though not every time. The median wait from the low back to the old high was 2.6 months. After the 2010 Eurozone Sovereign Debt Crisis, the shares needed 19.1 months to recover. Following the 2008-2009 crisis, the wait stretched to 49.7 months.
Microsoft’s Profits Still Cover Its Data Center Spending
Microsoft’s profit has kept growing, although less cash is left over than a year ago. Over the twelve months to September 30, 2026, Microsoft’s revenue was $346 billion, up 17.9% from a year earlier. The company’s operating margin rose to 47.1% in the twelve months to September 2026, up from 46.3% in the twelve months to September 2025.
Free cash flow, the cash left after spending on data centers and equipment, fell to $60.0 billion over the same twelve months, down from $78.0 billion a year earlier. Even so, on September 30, 2026, Microsoft held $64.3 billion of cash and short-term investments, exceeding its $57.2 billion of debt.
What Is Getting Harder For Microsoft Right Now?
During the October 28, 2026 call, management named pressures in the PC business, rising spending, and Azure’s supply of computing power. Windows OEM revenue fell 27% in fiscal Q1 2027. Management attributed this decline to the Windows 10 end of support in the prior year, inventory drawdowns, and weaker PC market demand. Management expects those trends to continue through the rest of the fiscal year.
Spending continues to climb. Capital spending was $45.2 billion in fiscal Q1 2027, and management expects it to be over $50 billion in fiscal Q2. Management also expects a Microsoft Cloud gross margin of roughly 65% in fiscal Q2, down from a year earlier, and said it will access additional sources of funding when it believes that is attractive. Management still expects the company to remain free cash flow positive in fiscal 2027.
Azure is short of capacity. Management said customer demand continues to exceed available supply, and some third-party GPU contracts have been delayed to the second half of the fiscal year. Azure revenue grew 48% in fiscal Q1 2027. For fiscal Q2, management guided to Azure growth of 49% to 50% in constant currency, and said the company needs more efficiency gains to get there. Azure’s growth rate for fiscal Q2 2027, against management’s guide, is the number to watch when Microsoft reports in January 2027.
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