Microsoft (MSFT) has found itself in unfamiliar territory.
For a stock that spent much of the past decade as Wall Street’s darling, 2026 has been anything but.
According to Seeking Alpha, the stock has tanked roughly 17% year-to-date, its worst quarterly showing since the 2008 financial crisis.
However, top bank BNP Paribas just cut through the noise with one of the sharpest calls on Wall Street.
The bank said that the ingredients for a rebound are simmering, but that the near-term pain isn’t going away quietly.
BNP analyst Stefan Slowinski didn’t mince words about the frustration, saying that,
“The ‘SaaS Smash’ has not spared Microsoft, which is the largest SaaS vendor, mainly through its 365 Commercial Cloud products.”
However, Slowinski believes there isn’t a broken core business here.
Azure continues to generate a ton of cash, and the enterprise moat is massive to say the least. The conundrum is whether the tech giant can convert its massive AI investments into real top-line growth in a relatively short period.
This, in turn, is a twofold problem: Copilot traction and Azure capacity allocation.
Slowinski argues that investors have grown too impatient with Copilot’s lack of clear momentum, potentially overlooking future growth from Anthropic’s Cowork product.
In fact, Microsoft CEO Satya Nadella is reportedly working to fix Copilot, with a clear focus on improving user experience and performance.
At the same time, the company is tackling another issue in Azure capacity.
BNP Paribas estimates that nearly one-third of Microsoft’s new AI capacity last quarter was used internally, supporting its internal apps and training AI models, rather than being sold to customers.
According to Microsoft’s latest earnings transcript (Q2 2025), if the capacity had been directed to external clients, growth might have topped 40%, rather than the 38% reported.
The fear here is that Microsoft is being drawn into a relentless and incredibly expensive superintelligence race with its own partner OpenAI, which happens to be Azure’s…
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