New York, Jan 29, 2026, 13:41 ET — Regular session
Microsoft shares dropped roughly 12% on Thursday, edging the stock closer to its session low as investors weighed the company’s record AI spending alongside renewed doubts about its cloud growth. By early afternoon, shares had fallen 12.0% to $423.78.
The decline hits more than just one company. Microsoft serves as a key indicator for enterprise tech spending and whether investments in AI are beginning to yield returns—or simply driving up costs.
“People have just been throwing money around… but now they’re starting to look under the hood,” said Max Wasserman, co-founder and senior portfolio manager at Miramar Capital. He highlighted how fast sentiment can turn when growth fails to keep pace with spending. 1
Microsoft reported quarterly revenue of $81.3 billion late Wednesday, marking a 17% increase. Azure and other cloud services revenue jumped 39% in the quarter ended Dec. 31. The company also revealed net gains from its OpenAI investment boosted net income by $7.6 billion. 2
Capital spending hit $37.5 billion this quarter, soaring nearly 66% from the previous year, with about two-thirds of that budget funneled into computing chips, Reuters reported. Eric Clark, portfolio manager of the LOGO ETF, pointed out that “revenues are up 17% and the cost of revenues are up 19%,” highlighting a risk that costs might be outpacing sales. 3
During its earnings call, Microsoft revealed for the first time that about 45% of its commercial RPO—remaining performance obligations, or contracted sales not yet counted as revenue—comes from OpenAI. This highlights just how significant OpenAI is to its cloud backlog. 4
Microsoft CFO Amy Hood told analysts Azure growth will stay steady at 37% to 38% this quarter, citing AI chip capacity limits. “If we’d allocated all of them to Azure, the KPI would have topped 40%,” she said, referring to new graphics chips recently brought online. 5
The sell-off in Microsoft shares came amid a wider tech downturn, as concerns mount that AI tools might disrupt traditional subscription software. “The market’s… pricing a worst-case scenario that software is dead,” said Adam Turnquist, chief technical strategist at LPL Financial. 6
The divide within Big Tech is clear. Meta’s stock surged following its announcement of a 2026 capital expenditure forecast between $115 billion and $135 billion, driven by its focus on what it terms “superintelligence.” CEO Mark Zuckerberg described the coming year as “a big year” for this initiative. 7
OpenAI remained center stage on Thursday following a report from The Information that Nvidia, Microsoft, and Amazon are discussing a potential investment of up to $60 billion in the ChatGPT creator. Reuters reached out for comment, but Amazon and Microsoft declined, while Nvidia and OpenAI had yet to respond. 8
The debate on Microsoft is tightening. If chip expenses continue to weigh and AI offerings take longer to deliver consistent, high-margin returns, investors are likely to pressure the stock — despite strong headline growth.
Traders are eyeing the upcoming megacap checkpoint: Apple will release its earnings after Thursday’s close, providing a fresh glimpse into demand amid the sector’s rising AI investments. 9
