Microsoft's stock still has a ways to go before reclaiming its highs - but for now, it's on a notable hot streak.
Microsoft shares $(MSFT)$ rose 4.6% on Wednesday and have climbed 10.9% across a three-day span. The daily performance was the stock's best since a 7.6% climb seen on May 1 of last year, according to Dow Jones Market Data. And over a three-session span, Microsoft shares delivered their best such performance since the stretch that ended April 28, 2023, when they rose 11.6%.
Microsoft's stock has come back alive after a dismal stretch that reflected fears about the company's positioning in the current artificial-intelligence landscape. Investors have worried about Microsoft's growth rate in the cloud and the sustainability of the company's software business as new AI tools gain steam.
Those concerns were amplified by Anthropic's recent disclosures around its Claude Mythos model. Baptista Research analyst Ishan Majumdar told MarketWatch last week that Mythos accelerated a change already underway in the industry - suggesting that agentic systems are already "moving from being a feature inside software to potentially replacing entire software workflows."
"The concern is no longer who benefits from AI, but whether software as a category retains its value in an agent-driven world," Majumdar said.
The extent of Microsoft's year-to-date selloff had been so dramatic that, through Tuesday's close, the company had wiped out $675 billion in market capitalization. That's more than the entire market value of Exxon Mobil (XOM), according to DataTrek co-founder Jessica Rabe and verified by Dow Jones Market Data.
Bulls see reasons to have faith. Wedbush analyst Dan Ives wrote in a Sunday note that Microsoft's selloff had been "very disconnected" given the company's opportunity to monetize AI in the coming years.
And even as Baird's William Power acknowledged that investor sentiment toward Microsoft has become "mixed to negative" lately, he defended the stock in a Wednesday note to clients.
"While we understand investors' frustrations pertaining to [an] arguably slower pace of innovation versus the AI labs (particularly Anthropic)," Power wrote, Microsoft "also continues to innovate and enterprise reach is a key advantage."
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