Microsoft shares fell as much as 4.6% Wednesday and is poised to record its biggest one-day decline since January 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, 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 missed Wall Street estimates. Revenue went up by 2% to $52.7 billion in the three months ending December 31, compared to the average analyst estimate of $52.94 billion, according to Refinitiv IBES.
Revenue growth is a long way off from the double-digit strides markets had become accustomed to. Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown said that Microsoft is dealing with a marked slowdown in personal computing revenues.
Over the last five days, the stock is up approximately 1.7%, while the stock's year-to-date shares are now about 0.7% below the redline.
Microsoft lost almost a third of its market value in the year 2022 because of tech stocks.
According to Gartner shipments for the world's largest software company fell nearly 29% between October and December, posting the largest quarterly shipment decline since the consulting firm began tracking the market in the mid- 1990s.
Microsoft announced last week that it would invest $10 billion into the artificial intelligence research laboratory and ChatGPT-designer OpenAI despite the rough year for sales.
The deal with ChatGPT could be a gamechanger for Microsoft as it gives the group a serious edge over competitors, including Google, said Lund-Yates. The market will need convincing to move the dial because of the fact that the AI industry is still in its junior stages.