NEW YORK, Feb 4, 2026, 16:07 EST — After-hours update.
- Microsoft shares climbed during regular trading, defying the broader slump in software stocks.
- Options flow remained defensive as short interest in Microsoft climbed throughout the past week.
- Traders remain focused on Azure service stability following a multi-region outage earlier this week.
Microsoft (MSFT) shares closed Wednesday up 0.6% at $413.56, bucking the broader sell-off in software stocks that has unsettled some corners of the tech sector.
This mattered because Microsoft has set the tone for the “AI trade” since its earnings last week, and the recent drop in its shares has sparked interest from bargain hunters as well as new short sellers. Yet in the options market, investors are favoring protective strategies over buying the dip, suggesting confidence remains fragile. Reuters
This week’s macro calendar has been shuffled following a brief U.S. government shutdown, delaying key data that could move megacaps by shifting rate expectations. The Labor Department announced the January employment report will drop Wednesday, Feb. 11, with the January CPI scheduled for Friday, Feb. 13. December JOLTS data is set for release Thursday. Reuters
Microsoft held up better than most on Wednesday in a sector that’s been hard hit by selling. The S&P 500 software and services index dropped almost 4% Tuesday and slid further the next day, Reuters reported. The iShares Expanded Tech-Software Sector ETF lost 3%, while ARK Innovation plunged close to 7%. Reuters
“In general, our customers have not been as eager to buy dips in software,” Steve Sosnick, chief strategist at Interactive Brokers, told Reuters, though he singled out Microsoft as a rare draw for buyers. Reuters
Derivatives sentiment remains cautious. “Software keeps trading heavy, and options flow is still mostly defensive,” said Chris Murphy, co-head of derivative strategy at Susquehanna Financial, in the Reuters report. He highlighted traders ramping up downside bets in sector ETFs. Reuters
Short sellers ramped up their positions after the stock fell following last week’s earnings report. Leon Gross, a research analyst at S3 Partners, noted that Microsoft’s short interest—shares sold short that eventually need to be repurchased—increased roughly 20% in the past week. Reuters
Off the tape, cloud reliability is grabbing attention again. Microsoft’s Azure status page reported a “platform issue” hitting various services across multiple regions from Feb. 2 to Feb. 3. Affected services included Virtual Machines, AKS, and managed identities. The root cause? An unintended policy change that blocked public read access to certain Microsoft-managed storage accounts for extension packages. Azure Status
MSFT bulls now face a crucial test: can Wednesday’s rally hold if more cloud-related concerns surface, or will the focus shift back to costs? The debate reignited after Microsoft’s Jan. 28 earnings showed record capital expenditures hitting $37.5 billion—up nearly 66% year-over-year—even as revenue and cloud growth slightly exceeded expectations. Reuters
But the risk is clear: a broad pullback in software valuations drags on, hedging remains heavy, and the stock reacts sharply to any hint that AI infrastructure spending is outpacing near-term gains — with shorts piling in on the dips and implied volatility still running high in segments of tech. Reuters
Traders are turning their attention to Thursday’s JOLTS report for clues on interest rates, with the rescheduled jobs data due Feb. 11 and CPI set for Feb. 13. Microsoft’s next shareholder milestone comes on Feb. 19, its ex-dividend date for the $0.91 quarterly payout, which will be paid out March 12, the company confirmed. news.microsoft.com
