In February, stocks classified under the Quality factor, including Microsoft, trailed Value counterparts by more than 5 percentage points, marking the worst shortfall for quality-indexed shares in five years. Microsoft’s high-margin software business contributed prominently to this underperformance narrative as investors reassessed growth premiums.

Heightened concerns that artificial intelligence could dismantle legacy software moats prompted money managers to question valuations of high-valuation tech names like Microsoft. This shift in sentiment spurred a rotation away from future-growth themes toward assets perceived as less vulnerable to AI disruption.

Professional investors funneled over $7 billion into ETFs focused on dividends, buybacks and immediate cash returns during the month. These inflows underscore a growing preference for Heavy Assets, Low Obsolescence staples over traditional tech growth holdings such as Microsoft.