Microsoft Stock Faces Pressure Amid Record AI Spending, Cramer Says

Microsoft’s stock has dipped 6.2% over the past three weeks, according to public trading data, despite reporting $61.8 billion in quarterly cloud revenue and a 14% year-over-year increase in Azure usage. Jim Cramer, citing internal management communications and capital allocation patterns, argues that investor skepticism is rooted in the company’s commitment to spend approximately $30 billion annually on AI infrastructure, research, and acquisitions through 2028. The core issue, as highlighted by Cramer, is not the ambition behind Microsoft’s AI strategy—driven by partnerships with OpenAI and integration across Office, Windows, and Azure—but the perceived lack of immediate profitability. While AI-driven services now contribute to 22% of Microsoft’s total revenue, this segment is still in a high-investment phase, with operating margins below 15%, significantly lower than the company’s 38% average across core enterprise software. Market analysts note that Microsoft’s price-to-earnings ratio has contracted from 34x to 29x over the last quarter, signaling declining confidence in near-term earnings growth. The shift is especially evident in institutional investor behavior: net short positions on MSFT rose by 17% in December 2025, peaking at 4.8% of float, according to publicly reported data. Despite the headwinds, Cramer remains bullish long-term, suggesting that the current market correction reflects a temporary mispricing of future value. He emphasizes that Microsoft’s AI blueprint includes measurable milestones—such as achieving 1.2 million AI-powered enterprise licenses by Q2 2026 and launching 12 new generative AI tools—potentially revalidating the capital outlay once implementation gains traction.