NEW YORK, Jan 30, 2026, 13:35 EST — Regular session
Microsoft shares slipped 0.5% to $431.15 on Friday, adding to the drag on AI-related stocks. Nvidia fell 0.9%, while data-storage company Sandisk surged 10.2%. Investors moved back and forth between bets on near-term demand and longer-term returns.
This week’s earnings reports have made AI a trial of both cash flow and credibility. Investors will tolerate hefty capital expenditure—money poured into data centers and chips—only if it’s backed by visible growth. 1
Microsoft reported capex of $37.5 billion for its October-December quarter, marking a nearly 66% jump. Azure revenue climbed 39%, just beating forecasts, as the company expanded its AI offerings for businesses. “One big obvious issue is that revenues are up 17% and the cost of revenues are up 19%,” noted Eric Clark, portfolio manager of the LOGO ETF. CFO Amy Hood indicated spending should ease slightly next quarter, while CEO Satya Nadella described AI as still in the “early innings.” 2
AI search startup Perplexity has inked a $750 million, three-year agreement to utilize Microsoft’s Azure cloud, Bloomberg reported—an arrangement Microsoft has since confirmed. A Microsoft spokesperson noted, “Perplexity has chosen Microsoft Foundry as its primary AI platform for model sourcing,” referring to the service that allows customers to deploy models from OpenAI, Anthropic, and xAI. 3
Meta shares dropped 3.1% to $715.20, erasing much of the prior session’s rally. In Frankfurt, analysts raised target prices following the company’s 73% increase in 2026 capital spending plans aimed at developing “superintelligence.” 4
Nvidia has faced geopolitical headwinds as well: China has granted conditional approval for AI startup DeepSeek to purchase the company’s H200 chips, though regulatory terms are still being worked out, according to two sources familiar with the matter. Nvidia CEO Jensen Huang said he hadn’t been informed and thought China was still finalizing the licence. 5
Sandisk projected fiscal third-quarter revenue between $4.4 billion and $4.8 billion, with adjusted earnings of $12 to $14 per share—both figures beating expectations. The company also extended its flash-chip supply agreement with Japan’s Kioxia through 2034. “Earnings are above the long-term trend,” noted Morgan Stanley analysts. Morningstar warned the memory chip shortage might persist until at least 2028. 6
The gains didn’t extend across the board: Western Digital dropped 12.9%, Seagate slid 9.0%, and Micron declined 2.3%. The iShares Semiconductor ETF fell 3.5%, highlighting how fast AI enthusiasm can turn into a widespread chip selloff.
The sector faces a clear risk. If demand for cloud services or ad spending slows, the hefty capex that fueled AI capacity might start weighing on margins. On top of that, export restrictions or licensing hold-ups could tighten chip sales further.
The broader market showed weakness, with the SPDR S&P 500 ETF falling 1.0% and the Invesco QQQ dropping 1.5%. This limits the ability of pricey AI stocks to brush off negative headlines.
Attention turns next week to Alphabet’s earnings on Feb. 4 and Amazon’s on Feb. 5. Both are expected to reveal new spending plans targeting data centers and AI. Traders will zero in on one key metric: revenue growth that justifies those investments. 7
