New York, January 29, 2026, 10:12 EST — Regular session
- Microsoft dropped roughly 11% following its earnings, as investors balanced steep AI investments against steady cloud growth
- Meta surged almost 8% after upping its 2026 capex forecast, wagering its ad business will cover the expansion costs
- A report surfaced that Big Tech could invest an additional $60 billion in OpenAI, intensifying scrutiny on AI-related expenses
Microsoft dropped 10.7% to $429.87 in early trading, weighing on sentiment among AI-related stocks, even as chipmakers showed more resilience. Meta Platforms climbed 7.9%, while Nvidia slipped 0.2% and AMD inched up 0.2%.
The latest setback for Microsoft is significant because investors are beginning to view “AI spend” as a cost to manage, not an endless growth narrative. The company reported record AI expenditure this quarter, and even a slight dip in cloud growth sparked a swift market revaluation. 1
Microsoft reported a 39% increase in Azure revenue for its fiscal second quarter, slightly surpassing the Visible Alpha consensus of 38.8%. Capital spending surged to $37.5 billion, with roughly two-thirds allocated to computing chips. “One big obvious issue is that revenues are up 17% and the cost of revenues are up 19%,” Eric Clark, portfolio manager of the LOGO ETF, told Reuters. 1
CEO Satya Nadella revealed on the call that Microsoft’s M365 Copilot, the $30-per-month AI assistant for business users, now boasts 15 million annual users. CFO Amy Hood noted that capital expenditures will dip a bit this quarter but cautioned that rising memory-chip prices will gradually pressure cloud profit margins. 1
A separate disclosure intensified concerns about Microsoft’s deep connection with OpenAI. The company revealed its cloud backlog, or remaining performance obligations, soared past $625 billion—more than doubling—and about 45% of that surge came from OpenAI. 1
Meta’s latest numbers took a different turn. The company raised its 2026 capital expenditure outlook to between $115 billion and $135 billion, aiming for what it terms “superintelligence.” Advertising revenue, up 24%, remains the key driver funding the push. “This is going to be a big year for delivering personal superintelligence,” CEO Mark Zuckerberg declared during the call. 2
John Belton, a portfolio manager at Gabelli Funds, described Meta’s valuation as “really not that demanding,” noting that returns are driven by its core business, which benefits from AI infrastructure. 2
AI buzz continues as Nvidia, Microsoft, and Amazon reportedly eye a combined investment of up to $60 billion in OpenAI, according to The Information, cited by Reuters. Nvidia is said to be considering up to $30 billion, with Microsoft possibly pitching in less than $10 billion. Reuters noted it couldn’t independently confirm the details. 3
The possibility of a new funding round raises questions about the underlying costs: who covers the expenses for chips, data centers, and power that large AI models demand, and will top clients continue locking in multi-year deals at rates that safeguard profits.
The trade can reverse quickly. Should cloud growth pick up again or AI tools begin to noticeably boost enterprise spending, investors might shrug off the current capex surprise. On the flip side, if spending remains elevated and margins shrink, the market might just lose patience with a longer-than-expected payoff timeline.
Traders are gearing up for Alphabet’s earnings report, set to drop after the close on Feb. 4, followed by Amazon’s Q4 call on Feb. 5. Nvidia’s results come later, on Feb. 25. All three will be closely watched for clues on AI demand and capacity. 4
