What’s Wrong with Microsoft? 2-12-26 - Becker Business

Becker Business Podcast

Host: Scott Becker
Episode: What's Wrong with Microsoft?
Date: February 12, 2026

Episode Overview

In this episode, Scott Becker takes a sharp, timely look at Microsoft’s recent business challenges, interrogating the reasons behind its stock decline despite strong financial results. Becker, openly identifying himself as a Microsoft investor, explores Wall Street’s reaction to slowing cloud growth and massive AI reinvestment, contextualizing Microsoft’s place among mega-cap tech giants.

Key Discussion Points & Insights

1. Microsoft’s Recent Stock Performance

Becker notes a significant stock drop:

“Its stock is down about 17% as we record this year to date and ultimately its market cap has fallen below 3 trillion.”
— Scott Becker [00:37]
Even after Microsoft beat revenue and earnings estimates for the quarter, the company’s stock and market cap declined.
- Insight: Investors responded negatively not because of immediate performance, but forward-looking fears.

2. The Cloud Business Is Slowing

The heart of the issue comes from Azure, Microsoft’s cloud platform:

“There’s slowing growth in their profitable Azure line... The cloud business is what drives so much of the profits today of Microsoft and of Amazon.”
— Scott Becker [01:18]
As growth stalls, investor anxiety mounts over the future of this highly profitable segment.

3. Market Parallels with Amazon

Becker highlights similarities between Microsoft and Amazon, both of which have cloud units (Azure and AWS) that are "cash cows" but now face growth deceleration.

“People are very concerned that they’re going to have their biggest growth and profit agent slowing.”
— Scott Becker [01:43]

4. Heavy Investment in AI

Microsoft has committed to substantial AI spending:

“Microsoft, like Amazon, has positioned that the need to spend a ton of money to invest in AI, to keep themselves really strong in the AI front and just continuing to keep up and keeping up...”
— Scott Becker [02:01]
While crucial for competitiveness, these costs are making investors nervous about near-term returns and margins.

5. The Central Question: What’s Wrong with Microsoft?

Becker summarizes the situation by identifying three issues:
- The company is still a “cash cow and doing great,” yet...
- There’s “slowing growth in its most profitable business.”
- There is “need to make huge investments in certain areas to keep keep it moving in the right direction.”
He frames Microsoft as fundamentally strong, but facing the headwinds of maturation and reinvestment.

Notable Quotes and Memorable Moments

On Investor Psychology:

“Notwithstanding beating on earnings and revenues, the stock is down 17% year to date.”
— Scott Becker [01:56]
On the Tech Industry at Large:

“Microsoft, like Amazon, has positioned that the need to spend a ton of money to invest in AI...”
— Scott Becker [02:01]
Summary of What’s Wrong:

“That’s the story today on Microsoft. Fascinating to watch.”
— Scott Becker [02:29]

Timestamps for Important Segments

[00:30] — Episode introduction, Microsoft’s stock drop
[00:50] — Recap: Microsoft beats revenue/earnings but stock declines
[01:18] — Azure’s slowing growth and impact
[01:43] — Investor concerns: profits and forward outlook
[02:01] — Microsoft’s AI investment drive and investor anxiety
[02:29] — Becker’s final summary and reflection

Tone and Language

Scott Becker’s style is candid, analytical, and personally engaged. As both a podcast host and investor, he balances concern and fascination as he unpacks Microsoft’s predicament, using clear, business-focused language accessible to general listeners and professionals alike.

Summary:
This episode delivers a concentrated, insightful analysis of how Microsoft’s slowing cloud growth and heavy AI investments—despite robust quarterly results—have created worry among investors and triggered a steep stock slide. Becker’s perspective is both personal and contextually rich, making the conversation a valuable listen for anyone interested in the shifting fortunes of Big Tech.

Transcript

A (0:01)

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B (0:30)

This is Scott Becker with the Becker Business and the Becker Private Equity Podcast. Today's discussion is what's wrong with Microsoft? And here's the discussion about Microsoft and I find this fascinating and I'm also a direct investor of Microsoft, so I find it fascinating in some ways in a not good way. First, its stock is down about 17% as we record this year to date and ultimately its market cap has fallen below 3 trillion. Second, notwithstanding beating its latest estimates on revenues and earnings for the quarter, which is not easy to do as a mega size company, its market cap dropped and its stock price dropped significantly, even winning on the top line and bottom line. So, so third, why did that happen? The reason that that this is striking why it happened is two big concerns that they're slowing growth in their profitable Azure line. They're sort of cloud business. The cloud business is what drives so much of the profits today of Microsoft and of Amazon, Amazon and aws Microsoft at Azure. As they see more and more people cutting into that business and stop having tremendous growth in that very profitable business, people are very concerned that they're going to have their biggest growth and profit agent is slowing. So this is why notwithstanding beating on earnings and revenues, the stock is down 17% year to date. I guess, I guess the third concept is that Microsoft, like Amazon, has positioned that the need to spend a ton of money to invest in AI, to keep themselves really strong in the AI front and just continuing to keep up and keeping up that is also left investors with a lot of concern. So what's wrong with Microsoft? It's overall cash cow and doing great. Second, slowing growth in its most profitable business. And third, the need to make huge investments in certain areas to keep keep it moving in the right direction. That's the story today on Microsoft. Fascinating to watch. Thank you for listening to the Becker Business and the Becker Private Equity Podcast. Thank you very, very much.

C (2:38)

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