Microsoft shares dropped as much at 4.6% Wednesday and is on track to record its biggest one-day decline since Jan. 4, when shares plummeted 4.4%.
Its price-to-earnings ratio was around 26. Its 52- week PE low was on Nov. 3, 2022 at 22.21 which was the lowest PE ratio since Aug. 28, 2015 when it was 18.23.
On Tuesday, the maker of the Windows operating system and Xbox gaming system narrowly missed Wall Street estimates. Second-quarter revenue rose 2% to $52.7 billion in the three months ending on Dec. 31, compared with the average analyst estimate of $52.94 billion, according to Refinitiv IBES.
Net income fell 12% to $16.4 billion.
"The group’s overall revenue growth is a long way off the double-digit strides markets had become accustomed to. Microsoft is dealing with a marked slowdown in personal computing revenues, which reflects the incredibly challenging consumer environment," said Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown.
Over the last five days, the stock is up approximately 1.7%, while year-to-date, shares are now roughly 0.7% beneath the redline.
During 2022, Microsoft lost nearly a third of its market value as tech stocks diminished.
According to Gartner, shipments for the world's largest software company tumbled nearly 29% between October and December, posting the largest quarterly shipment decline since the consulting firm began tracking the market in the mid-1990s.
Despite the rough year for sales, Microsoft announced last week it would invest as much as $10 billion into the artificial intelligence research laboratory and ChatGPT-designer OpenAI.
The joint announcement highlighted the third phase of Microsoft’s partnership with OpenAI through a multiyear, multibillion-dollar investment to accelerate AI technological breakthroughs.
"The ChatGPT deal could also be a game changer for Microsoft, as it gives the group a serious edge on competitors including Google," said Lund-Yates. "The AI industry is still in its junior stages so the market will need some convincing that this will meaningfully move the dial."