NEW YORK, Jan 30, 2026, 16:12 EST — After-hours
- Microsoft shares dropped further on Friday, deepening the steep selloff sparked by its earnings report.
- Investors are zeroing in on cloud expansion, AI capabilities, and the rising costs of new data centers and chips.
- The Feb. 6 U.S. jobs report and next week’s megacap earnings will weigh heavily on rate-sensitive tech.
Microsoft shares slipped roughly 0.9% to $429.73 during Friday’s regular session, while the Nasdaq 100 ETF dropped around 1.2%. The S&P 500 ETF also edged lower, down about 0.4%.
The stock slid 10% yesterday, wiping out over $350 billion in market value after the company’s latest cloud and spending updates disappointed. Meanwhile, Meta Platforms jumped about 10% that same day—a split investors are starting to see as intentional, not accidental. “Meta’s headline numbers are a really interesting reflection of the market’s attitude toward spending in the AI space,” said John Belton, a portfolio manager at Gabelli Funds. 1
The timing couldn’t be more awkward. With a packed earnings calendar looming, the market is on edge over any disconnect between forecasts and results—particularly among AI-focused megacaps. “For those companies where expectations have become very, very lofty, the onus is going to be on them to deliver,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors. 2
Microsoft reported a 17% increase in revenue to $81.3 billion for its fiscal second quarter ended Dec. 31. Operating income climbed 21%, while GAAP net income surged 60%. CEO Satya Nadella described the company as “only at the beginning phases of AI diffusion.” Meanwhile, CFO Amy Hood revealed that Microsoft Cloud revenue topped $50 billion in the quarter. 3
Microsoft reported $37.5 billion in capital spending — or capex, used for assets like data centers and chips — marking a nearly 66% jump from last year. About two-thirds of that went to computing chips. Hood expects capex to dip slightly next quarter but flagged rising memory-chip costs as a drag on cloud margins. The company projected Azure growth between 37% and 38% this quarter and set overall sales around $81.2 billion, matching estimates from Visible Alpha and LSEG. Nadella revealed 15 million annual users for the $30-a-month M365 Copilot assistant and noted that Microsoft is “supply constrained” while expanding AI capacity, facing mounting competition from Alphabet. 4
Microsoft scored a new AI client. Perplexity AI, a search startup, struck a $750 million, three-year deal to run on Azure, Bloomberg News reported. The agreement channels model access through Microsoft’s Foundry program, tapping systems from OpenAI, Anthropic, and xAI. “Perplexity has chosen Microsoft Foundry as its primary AI platform for model sourcing under a new multi-year agreement,” a Microsoft spokesperson told Reuters. Perplexity, however, told Bloomberg it hasn’t cut back on spending with Amazon’s cloud services. 5
As regular trading wraps up, the big question is whether Monday will see bargain hunters step in or if analysts will roll out more cuts to estimates and price targets. The key issue remains: can Microsoft ramp up chip deliveries and convert power into billable Azure capacity fast enough to settle the capex debate?
There’s a downside scenario that’s straightforward to outline. If cloud growth remains constrained by capacity limits, or if the expenses tied to running and expanding AI infrastructure outpace revenue gains, margins may face renewed strain and the stock could falter in recovering.
Feb. 6 is the next key date, with the U.S. January jobs report set for release at 8:30 a.m. ET. This number has the power to shift rate expectations and, in turn, impact demand for pricey growth stocks. 6
