$Microsoft(MSFT)$  Yes, this looks closer to an overreaction than a thesis break, but the entry decision depends on time horizon.

What actually disappointed the market

The fundamentals were solid. Growth did not slow. The sell-off was driven by expectations, not results. Buy-side positioning had priced in near-flawless AI execution. When management flagged ongoing supply-chain and capacity constraints, the market recalibrated near-term AI monetisation, even though demand remains clearly intact.

That distinction matters.

Is the AI story impaired?

No. Microsoft is demand-constrained, not demand-challenged. Azure’s 38% growth confirms AI workloads are scaling rapidly. The issue is delivery timing. Revenue is being deferred, not lost. That is a very different problem from weakening end demand.

$400 as a buy level?

At around $400, Microsoft is no longer priced for perfection. The multiple compression reflects delayed upside, not deteriorating fundamentals. For long-term investors, this is a reasonable incremental entry zone, especially for those who missed earlier rallies. However, short-term volatility can persist if markets remain sensitive to capex intensity and AI ROI timing.

Risk to watch

The key risk is not AI relevance, but duration of capex-heavy phases before cash flow inflects. If constraints linger longer than expected, sentiment may stay cautious even as revenues grow.

Bottom line

This was a valuation reset, not a structural crack. For long-term holders, $400 looks attractive for scaling in. For traders, patience may still be rewarded. The AI engine is running. It is just waiting on more fuel lines to come online.