2026-01-30 12:31:15
Shares in Microsoft plunged dramatically on Thursday (01.29.26) as investors grow increasingly worried about the company’s prolific spending on AI.
Microsoft stock fell around 10 per cent in a single session, wiping roughly $357 billion off the company’s market value – its biggest daily decline since 2020 – and dragging the wider software sector down with it.
The sell-off followed the company’s latest earnings report, which showed slowing growth in its Azure cloud business at the same time as capital expenditure surged to record levels.
Microsoft’s stock has since risen by 0.55 per cent in Friday’s (01.30.26) pre-market trading.
While Microsoft beat headline revenue expectations, Azure growth came in slightly below forecasts, and the company warned that expansion would remain broadly flat in the coming quarter.
Executives pointed to ongoing AI chip supply constraints, even as spending on data centers and infrastructure jumped 66 percent year-on-year to $37.5 billionn for the quarter.
For Wall Street, that combination has proved uncomfortable, as analysts have said investors had hoped to see clearer signs that Microsoft’s AI investments were translating into faster cloud growth and stronger margins, rather than escalating costs.
Wedbush analyst Dan Ives said: “The market wanted less capex and faster AI monetisation.”
Adding to the pressure are concerns around OpenAI, in which Microsoft remains the largest strategic backer.
The company disclosed that OpenAI now accounts for around 45 per cent of its cloud backlog, intensifying fears that a slowdown or funding crunch at the AI startup could ripple back to Microsoft’s own growth outlook.
Reports suggesting OpenAI is burning cash rapidly, while competitors such as Google and Anthropic gain traction, have only heightened those anxieties.
Other tech heavyweights exposed to AI infrastructure spending, including Nvidia and Amazon, also saw their shares dip amid the broader reassessment.
Despite the market reaction, some analysts urged patience, arguing Microsoft is deliberately prioritizing long-term platform control over short-term growth optics.
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