Can Microsoft come back? The debate is on

It could get worse for Microsoft: Analyst

Microsoft's latest earnings report scared many investors—its stock is down nearly 10 percent Tuesday morning—and analysts are arguing over what that means for the company.

One Nomura Securities analyst believes the company's best days might be over.

Rick Sherlund told CNBC's "Squawk on the Street" on Tuesday the Seattle-based tech giant has lost its momentum from last year. "They've had a benefit of a great 16-month expansion, and last year you had the migration from the [older] Windows XP, where they ended support, to a newer version of Windows," he said. "You had a tailwind as you're transitioning into the cloud. You had this benefit that's now dissipating, and no one was sure just how much of a benefit that was versus underlying PC demand."

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So far in 2015, Microsoft's stock is down 9 percent, after rising 24 percent last year.

Sherlund said that falling sales of Microsoft products also hindered the company in its latest earnings report. "When you looked under the covers of the December quarter, you realized that while Windows was really down 13 percent, Office was down 13 percent for commercial and 25 [percent] for consumers, it kind of took your breath away," he said. "Then you realize the really tough comparisons are coming up in March and June, so as we say, the honeymoon is over."

The recent volatility in the foreign exchange markets has also crippled the company's stock, despite having hedged against it. "Because of the extraordinary move, I guess you just can't hedge for all of that," he said.

Nevertheless, another analyst believes the company can rebound.

Microsoft's earnings crash

Brent Thill, managing director at UBS, told CNBC's "Squawk Alley" that the tech giant is still outperforming its peers. "Their commercial business is still growing at a high, single-digit growth rate," he said. When you compare to Oracle and other large-cap peers, they're growing at a much bigger pace."

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Thill added he believes this is just a "blip" for the company, as it will complete a $31 billion buy-back and it has "a lot more recurring revenue given the shift to the cloud." It will take some time for Microsoft to recover, though. "Clearly they'll be in the penalty box for a while," Thill said.

Another positive sign for investors is the cultural change that current CEO Satya Nadella has brought to the company. "It's cool to work at Microsoft again," said Spencer Rascoff, Zillow's CEO on Tuesday. "Taking the Microsoft Suite of apps and putting it into IOS [is] a small thing, but it sends a huge statement to the technology community that Microsoft is now platform-agnostic and they're embracing mobile."

—CNBC's Thomas DiChristopher contributed to this report.