Microsoft stock hits worst start since 2008 crisis

The technology giant Microsoft (NASDAQ: MSFT) has been suffering one of its most devastating quarters so far in the 2026 stock market. Indeed, MSFT shares started the year changing hands at $483.62 and plunged 25% by press time on March 27 to $359.14.

While the quarterly crash already constitutes the worst start of a year within the entire XXI century for Microsoft, extending the chart to October 2025 shows the blue-chip company is suffering its worst downturn since the Great Recession of 2008 in relative terms, and ever in absolute terms.

Specifically, MSFT equity hit approximately $542 in late October, meaning the value of the entire company stood above $4 trillion. Considering the Friday, March 27 stock price, Microsoft is valued at about $2.7 trillion, indicating it had suffered a $1.3 trillion market capitalization wipe.

The second-largest crash in the firm’s history took place in 2022 and amounted to roughly $1 trillion, meaning that the crisis unfolding in early 2026 is some $300 billion bigger.

Why Microsoft lost $1.3 trillion in market cap since October

So far, much of Microsoft stock’s decline appears closely linked to the company’s artificial intelligence (AI) endeavors and its links to the wider AI industry and OpenAI in particular.

Perhaps the most prominent example of the fact came after the blue-chip technology firm published an arguably blockbuster earnings report that, nonetheless, led to a $360 billion one-session valuation drop.

The January 29 crash was, arguably, primarily driven by the revelation that almost half of Microsoft’s backlog is linked to OpenAI – a company that is rapidly burning cash and expects to suffer a $14 billion loss in 2026.

More recently, the Bill Gates-founded company saw additional setbacks related to its own Copilot platform, which has been facing strong backlash due to aggressive integration in various other systems, including Windows.

Melius Research, for example, noted the AI as one of the reasons for the cautious rating and price target it assigned. 

How Microsoft is undermining its own reputation

Simultaneously, Microsoft has been suffering significant hits to its reputation as exemplified by a relatively new nickname of growing popularity: Microslop.

Notably, many users have been complaining that Windows 11 is a subpar, slow, and buggy operating system, with some observers opining that the accelerated end of support for Windows 10 was an attempt to strongarm customers into adopting an allegedly inferior product.

Microsoft’s popularity has also been suffering due to its AI-related programs and connections. The growing number of layoffs in the technology and multiple other sectors, for example, are often blamed on artificial intelligence advancements.

The fact that said workforce reductions are also frequently presented as AI successfully achieving what it was made to do – replace humans with cheaper software and hardware – also does not help with reputation.

Microsoft stock and the 2026 big tech crisis

Elsewhere, the entire technology sector has been taking a hit in recent months, with even the world’s largest company by market capitalization and the star of the stock market’s phase after 2022, Nvidia (NASDAQ: NVDA), lost nearly $1 trillion since the October highs.

So far, it would appear that the unconvincing path to profitability for AI companies, their insatiable gluttony for cash, and the reportedly limited impact the technology has on the productivity of its adopters are the driving forces behind the slowdown.

Similarly, multiple recent reports indicate that the so-called ‘hallucinations’ – instances where artificial intelligence very confidently gives poor or completely fabricated replies – are, essentially, unavoidable given the current foundations of the research.

With AI often marketed as eventually being able to operate autonomously, the notion that one would need to accept either extremely unreliable results or have to maintain a corps of human fact checkers appears to largely undermine the basic value proposition.

Could 2026 become even worse for Microsoft stock?

Lastly, the Iran war has caused major supply chain disruptions, including for resources directly and indirectly critical for the technology sector. Thus, unless the situation is resolved swiftly, the entire industry could soon face additional external pressures.

Given Microsoft’s central position among AI companies, but in tech more broadly, and its own mishaps, the poor start to 2026 in the stock market is likely the result of significant structural issues and their spillover between numerous intertwined companies.

Still, thanks to its size and wealth, the Bill Gates-founded firm is extremely unlikely to face total collapse even if the ongoing crisis persists in the mid and long-term.

Featured image via Shutterstock