Source: BNN Bloomberg

Microsoft's stock has been struggling in recent months, with many investors citing "AI fatigue" as one of the reasons for its underperformance. Over the past six months, Microsoft shares have dipped by less than 1%, while the Nasdaq 100 Index has gained nearly 10%.

One of the key factors contributing to this lag is the growing competition in the AI sector, with rivals such as Amazon and Alphabet catching up to Microsoft’s AI advancements. Analysts have downgraded Microsoft’s stock, expressing concerns that its AI lead has diminished, which could impact its future performance.

Additionally, Microsoft’s high valuation, trading at 31 times estimated earnings, has made some investors wary. Despite these challenges, the company is still expected to see long-term growth, with revenue projected to rise by 14.5% in the 2025 fiscal year. However, the short-term outlook remains cautious, as investors await stronger proof of AI-driven demand to justify Microsoft's premium valuation.

While Microsoft’s stock remains up 14% for the year, its recent underperformance has raised questions about whether AI will continue to be a major growth driver for the company.