--- title: "This Tech Giant Was the Worst-Performing Mega-Cap in the Dow Jones Industrial Average in the First Half. Stock to Avoid or No-Brainer Buying Opportunity?" type: "News" locale: "en" url: "https://longbridge.com/en/news/291855197.md" description: "Microsoft was the worst-performing mega-cap in the Dow Jones Industrial Average during the first half of the year, dropping approximately 20% due to investor concerns that AI might replace traditional software. However, the article argues this is a buying opportunity, citing Microsoft's deep integration into business operations, its successful incorporation of AI features like Copilot, and a booming cloud/AI business with $37 billion in annual revenue run rate. Valued at 20x forward earnings, it is presented as a strong long-term investment." datetime: "2026-07-07T00:15:52.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/291855197.md) - [en](https://longbridge.com/en/news/291855197.md) - [zh-HK](https://longbridge.com/zh-HK/news/291855197.md) --- # This Tech Giant Was the Worst-Performing Mega-Cap in the Dow Jones Industrial Average in the First Half. Stock to Avoid or No-Brainer Buying Opportunity? After three years of spectacular gains, technology companies faced a rockier path in the first half of this year -- particularly in the first quarter. Investors worried about the pace of spending on artificial intelligence (AI) and whether the revenue opportunity would make it all worthwhile. Turmoil in Iran also weighed on sentiment as energy prices rose and investors carefully watched U.S. economic reports -- and many of these reports prompted them to question the strength of the economy. All of these uncertainties pushed investors into a rotation out of certain AI stocks and into companies viewed as offering more revenue stability. The situation brightened in the second quarter, as strong corporate earnings reports and work toward peace in Iran offered investors reason for optimism. The **S&P 500**, the **Nasdaq Composite**, and the **Dow Jones Industrial Average** even advanced in the double digits. And the Dow posted its best first half in five years. But, during the first half, one particular tech stock had a difficult time. This giant was the worst-performing mega-cap in the Dow over that period. Is the company a stock to avoid, or is it offering investors a no-brainer buying opportunity right now? Let's find out. ![An investor looks at a declining stock chart. ](https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Nzc1MzQvZ2V0dHlpbWFnZXMtMTA1OTY2MTk0MC5qcGcmdz0zODQw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Image source: Getty Images. ## Platforms you may use daily Which company am I talking about? One that you probably know very well -- you may even use one of its key products daily at work or at home. I'm talking about **Microsoft** (MSFT 0.94%), owner of the Microsoft 365 suite of apps, including the immensely popular platforms Word and Excel. Microsoft stock dropped about 20% in the first half of the year, posting the biggest loss of any mega-cap member of the Dow Jones Industrial Average. Why such a decline? Earlier in the year, as the abilities of AI models progressed, some investors started to worry that AI would eventually replace software. As a result, software stocks such as Microsoft slid. Expand ![Microsoft Stock Quote](https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL01TRlQucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) ## NASDAQ: MSFT Microsoft Today's Change (-0.94%) $-3.68 Current Price $386.81 ### Key Data Points Market Cap $2.9TMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary. Day's Range $381.26 - $389.04 52wk Range $349.20 - $555.45 Volume 1.1M Avg Vol 39.8M Gross Margin 68.31% Dividend Yield 0.91% Now, I'll address this concern right away: It's very possible that AI could replace some software down the road -- but I wouldn't expect the Microsoft 365 suite to be part of this group. Companies have extensively integrated Microsoft's software into their operations, meaning it would be difficult, time-consuming, and costly to drop this platform in favor of another option. It's also important to note that Microsoft's software integrates AI, offering AI features such as Copilot to users. So as AI advances, Microsoft's software is likely to improve too. Meanwhile, at home users of Microsoft may not be quick to shift out of their habits of writing on Microsoft Word, for example, and favor a new system. People tend to stick with what they feel most comfortable with -- and many people have been using Microsoft's software for decades. ## AI as a valuable partner So I don't think AI represents a major threat to Microsoft, and instead, it may even be a valuable partner. On top of this, Microsoft's cloud business is significantly benefiting from AI as it offers AI products and services to its customers. In the recent quarter, the company said its AI business soared 123% to exceed an annual revenue run rate of $37 billion. As a cloud leader and a key partner of OpenAI -- Microsoft has invested about $13 billion in the AI lab -- Microsoft is well-positioned to win in the coming chapters of the AI story. Of course, Microsoft stock may not soar as much as a young, up-and-coming AI stock, but that's OK. The company has a profile that may suit a broad range of investors: Its earnings track record will impress cautious investors, and its exposure to AI will please growth investors. And this combination should support stock performance over the long run. Meanwhile, Microsoft looks dirt cheap at 20x forward earnings estimates, making this Dow Jones stock a no-brainer buy right now. ### Related Stocks - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [MSFD.US](https://longbridge.com/en/quote/MSFD.US.md) - [MSFU.US](https://longbridge.com/en/quote/MSFU.US.md) - [MSFX.US](https://longbridge.com/en/quote/MSFX.US.md) - [MSFL.US](https://longbridge.com/en/quote/MSFL.US.md) - [MSFO.US](https://longbridge.com/en/quote/MSFO.US.md) - [MSFW.US](https://longbridge.com/en/quote/MSFW.US.md) - [MSFY.US](https://longbridge.com/en/quote/MSFY.US.md) - [MAGX.US](https://longbridge.com/en/quote/MAGX.US.md) - [.DJI.US](https://longbridge.com/en/quote/.DJI.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [.IXIC.US](https://longbridge.com/en/quote/.IXIC.US.md) ## Related News & Research - [Microsoft cuts 4,800 jobs across sales and Xbox. Read the memo.](https://longbridge.com/en/news/291811857.md) - [Microsoft Is Letting Go Employees Amid AI Investments And Xbox Restructuring](https://longbridge.com/en/news/291845965.md) - [MSFT Stock Alert: Microsoft Invests $2.5 Billion in AI Implementation Unit](https://longbridge.com/en/news/291586048.md) - ['A Change Is Coming,' Says Gil Luria About Microsoft Stock](https://longbridge.com/en/news/291852861.md) - [Microsoft's Xbox cuts 1,600 employees, with plans to shed 20% of its workforce this year](https://longbridge.com/en/news/291811836.md)