Key Takeaways
- MSFT climbed 3% on Wednesday and added another 0.7% in Thursday’s premarket session
- Shares declined 23% during the first half of 2026 — the worst H1 performance since 2000
- Haleon announced a five-year expansion of its AI and cloud partnership with Microsoft
- Job reductions affecting under 2.5% of Microsoft’s approximately 228,000 employees are reportedly coming
- Analyst consensus remains overwhelmingly bullish: 35 Buy ratings out of 36, with a $562.10 average target
Microsoft (MSFT) shares rallied approximately 3% during Wednesday’s session on July 2, marking a notable rebound after a challenging year.
The tech giant’s shares tumbled 23% during the opening half of 2026 — marking its most difficult six-month stretch since the turn of the millennium. The month of June proved particularly brutal, with a 17% plunge representing the sharpest single-month downturn since December 2000.
However, market dynamics appear to be changing.
A sector rotation away from semiconductor stocks and into software names has begun providing tailwinds. The iShares Expanded Tech-Software ETF (IGV) posted gains for four consecutive sessions ending Wednesday, accumulating a 7% advance over eight trading days. Meanwhile, the iShares Semiconductor ETF (SOXX) retreated 8.5% during the identical timeframe.
Microsoft’s substantial exposure to software — previously viewed as a liability throughout this year — has now become an advantage.
Premarket activity Thursday showed the stock advancing an additional 0.7%. The S&P 500 remained relatively flat, the Dow Jones edged up 0.2%, while the Nasdaq slipped 0.3%.
Haleon Announces Extended Five-Year Microsoft AI Partnership
Wednesday brought news that Haleon, a global consumer health enterprise, has formalized a new five-year arrangement to broaden its deployment of Microsoft’s artificial intelligence, cloud infrastructure, and data solutions throughout its worldwide operations.
The partnership encompasses Microsoft 365 Copilot, Azure cloud platforms, and additional AI capabilities. According to Haleon, these technologies will streamline automated processes, enhance team collaboration, and bolster cybersecurity measures.
Both organizations intend to co-develop AI tools targeted at consumer insights, product innovation, and supply chain optimization.
Haleon stated that the initiative aims to empower its workforce with faster decision-making capabilities and accelerate product delivery to consumers. The company has established an ambitious objective of reaching an additional one billion consumers by the year 2030.
For Microsoft, this represents another significant enterprise client committing to its AI ecosystem.
Workforce Reductions Expected Soon
Alongside the positive developments, less favorable news has emerged. According to Business Insider, Microsoft may unveil thousands of position eliminations as soon as next week.
The workforce adjustments are anticipated to impact under 2.5% of Microsoft’sapproximately 228,000 full-time workforce — a more modest scale compared to earlier reductions that eliminated roughly 4% of personnel.
Sales and consulting divisions may face cuts, alongside previously anticipated reductions within the Xbox organization.
Microsoft has yet to officially verify the layoff plans. The potential announcement timing coincides with the close of Microsoft’s fiscal year on June 30, when organizational budget reviews and staffing assessments typically occur.
Notwithstanding the challenging start to 2026, Wall Street sentiment remains decidedly optimistic. Microsoft currently trades at a forward price-to-earnings multiple of 21.52.
Revenue growth projections through 2028 exceed the S&P 500 average by more than double, based on MarketWatch data.
TipRanks statistics reveal that 35 out of 36 analysts tracking Microsoft assign it a Buy recommendation, with one Hold rating and zero Sell ratings. The consensus 12-month price objective stands at $562.10, suggesting approximately 38% potential appreciation from present trading levels.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
