New York, May 6, 2026, 06:39 EDT
Microsoft shares slipped in premarket hours Wednesday, ticking down 0.25% to $410.35 after ending Tuesday at $411.38, a drop of 0.54%. That price action kept MSFT under pressure, even as segments of the AI trade continued to attract buyers.
This time, the broader market tone leaned positive. U.S. index futures ticked higher heading into the open—Nasdaq 100 futures up 0.81% at 4:43 a.m. ET. Chipmaker AMD’s boost to data-center demand sentiment helped. “Wall Street is still betting that Middle East tensions will not derail an earnings-led rally,” said Kyle Rodda, senior financial market analyst at Capital.com. Reuters
The challenge for Microsoft is largely its own. The company’s bullish Azure cloud forecast—expecting 39% to 40% growth this quarter in constant currency—has investors parsing how that stacks up against the hefty bill for hardware and energy tied to AI. That growth figure, stripping out currency moves, leaves some weighing the upside against ongoing costs for servers, chips, and electricity.
Microsoft turned in solid results: revenue jumped 18% to $82.9 billion for the quarter ended March 31, with diluted EPS up 23% to $4.27. CEO Satya Nadella said the company’s AI business now has an annual revenue run rate over $37 billion—a rough projection for yearly sales.
Paying for the growth isn’t cheap. Microsoft reported $15.8 billion in free cash flow, trimmed by a jump in capital expenditures—think data centers, servers, chips. CFO Amy Hood told analysts that Azure’s demand is running ahead of what the company can supply, and Microsoft signaled more hefty investment coming next quarter.
The competition is heating up. Google Cloud’s revenue soared 63% in the first quarter, eclipsing Azure’s 40% and Amazon’s 28% growth in their cloud businesses. Reuters reported Tuesday that Alphabet’s market value drew nearer to Nvidia, as investors latched onto its AI and cloud traction.
Microsoft’s shares have taken a more measured approach, despite solid top-line numbers. Rebecca Wettemann, CEO at Valoir, told Reuters some clients were shifting over to Google, viewing its AI tools as “more accurate and trustworthy” compared with Copilot, Microsoft’s AI assistant built into its workplace software. Reuters
OpenAI continues to shift. Last week, Microsoft and OpenAI revised their agreement: Microsoft stays on as OpenAI’s main cloud provider, but it no longer holds exclusive rights to resell OpenAI’s products via its cloud. “Essential” for OpenAI’s enterprise ambitions, according to D.A. Davidson & Co. analyst Gil Luria. Reuters
It’s a double-edged sword for Microsoft. The new terms lock in more predictable OpenAI revenue for the company. But they also open the door for Amazon and Google to compete for a slice of OpenAI’s cloud business—a notable shift, especially as investors weigh each AI dollar spent against the promise of future sales.
There’s a chance the outlays hit before any real benefit lands. Joe Maginot, who manages large-cap portfolios at Madison Investments, told Reuters investors want to see what all that capex gets them. He pointed out the math is shifting—operating cash flow is getting eaten up by those investments.
Even so, Microsoft brings an arsenal competitors can’t easily replicate: Azure, Office, Windows, LinkedIn, GitHub, plus a war chest big enough to power through market jitters. Last quarter? The company handed $10.2 billion back to shareholders via dividends and buybacks.
For Microsoft, the immediate question isn’t about the existence of AI demand. The real issue is if Azure can expand, Copilot can gain traction, and revenue tied to OpenAI can climb quickly enough to justify one of the heftiest AI infrastructure tabs out there—and keep investors on board.
