Microsoft shares hit 52-week low on $37.5 billion AI spending spree, but Morningstar says stock is 38% undervalued at $356

Microsoft's share price fell over 10% in early 2026 and hit $356.28 on March 30 after the company disclosed $37.5 billion in capital expenditures in its fiscal Q2 (ended Dec. 31)—a 66% year-over-year jump—to upgrade its cloud infrastructure for AI workloads. Wall Street punished the tech giant for the massive spending despite strong financial results: Q2 revenue grew 17% to $81.3 billion and net income jumped 60% to $38.5 billion.

Microsoft's spending is concentrated on rebuilding cloud infrastructure that was designed before AI demands. The company depends on OpenAI for 45% of its remaining performance obligations (long-term committed work); OpenAI accelerated from $1 billion per quarter at end-2024 to $2 billion per month now, justifying the infrastructure overhaul to keep up with demand.

For business professionals and investors: Morningstar estimates Microsoft's fair value at $600 per share, making the current price 38% undervalued. The AI market is forecast to grow from $335 billion this year to $1.3 trillion by 2032, meaning Microsoft's infrastructure spending today positions it to capture years of revenue growth as AI adoption accelerates across enterprises.