Key Takeaways
- MSFT gained 3% Wednesday and added 0.7% in Thursday’s premarket session
- Shares declined 23% during H1 2026 — the worst half-year performance since 2000
- Haleon announced a five-year strategic AI and cloud agreement with Microsoft
- Job reductions potentially impacting less than 2.5% of approximately 228,000 employees are reportedly planned
- Wall Street consensus: 35 Buy ratings from 36 analysts, average target price of $562.10
Shares of Microsoft (MSFT) climbed approximately 3% during Wednesday’s trading session on July 2, offering relief after a challenging year-to-date performance.
The tech giant’s stock tumbled 23% during the opening half of 2026 — marking its weakest first-half showing since the turn of the millennium. Last month proved particularly brutal, with a 17% drop representing the sharpest monthly decline since the final month of 2000.
Yet market dynamics are evolving.
A sector rotation from semiconductor stocks toward software companies has begun favoring names like Microsoft. The iShares Expanded Tech-Software ETF (IGV) posted gains across 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 considered a headwind throughout this year — has transformed into an advantage.
Shares extended their recovery with a 0.7% premarket gain Thursday morning. The S&P 500 showed minimal movement, while the Dow Jones Industrial Average edged up 0.2% and the Nasdaq Composite slipped 0.3%.
Haleon Partners with Microsoft for Five-Year AI Initiative
Consumer health giant Haleon unveiled a comprehensive five-year partnership expansion with Microsoft on Wednesday, focused on deploying AI, cloud infrastructure, and data analytics throughout its worldwide operations.
The collaboration encompasses Microsoft 365 Copilot, Azure cloud platforms, and advanced AI capabilities. According to Haleon, these technologies will streamline repetitive processes, enhance team coordination, and bolster cybersecurity measures.
Both organizations intend to co-create AI tools targeting consumer insights, innovation pipelines, and logistics optimization.
Haleon stated the partnership aims to accelerate decision-making and expedite product delivery to consumers. The company has established an ambitious objective of reaching an additional one billion consumers by decade’s end.
For Microsoft, the arrangement represents another major enterprise client committing to its AI ecosystem.
Workforce Reductions Expected Soon
The encouraging developments arrive alongside concerning reports about personnel changes. Business Insider indicated that Microsoft may unveil significant workforce reductions as soon as the coming week.
The cuts are anticipated to impact under 2.5% of Microsoft’sapproximately 228,000 full-time workforce — a more modest scope than the prior restructuring that eliminated roughly 4% of positions.
Sales teams and consulting divisions may face reductions, alongside previously anticipated adjustments within the Xbox organization.
Microsoft hasn’t issued official confirmation regarding the layoffs. The potential announcement coincides with Microsoft’s fiscal year conclusion on June 30, when organizational budget and headcount assessments typically occur.
Notwithstanding the challenging 2026 opening, Wall Street sentiment remains overwhelmingly bullish. Microsoft currently trades at a forward price-to-earnings multiple of 21.52 times.
Revenue growth projections exceed double the S&P 500’s anticipated pace through 2028, per MarketWatch analysis.
TipRanks analytics reveal 35 of 36 analysts following Microsoft assign Buy recommendations, with one Hold rating and zero Sell opinions. The consensus 12-month price objective stands at $562.10, suggesting approximately 38% appreciation potential from present valuation levels.
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