New York, Feb 6, 2026, 09:50 EST — Regular session underway
Microsoft shares were up 0.9%, hitting $397.21 early Friday, clawing back slightly after a tough week for major software stocks. The stock kicked off the session close to $399, fluctuating between $393.92 and $402.41.
The move follows a steep selloff in U.S. software and data services shares, sparked by concerns that rapidly evolving AI tools might undercut pricing and dampen demand for legacy software. Microsoft dropped 5% on Thursday. One Bailard portfolio manager described the market mood as a “sell-everything mindset.” 1
Spending is under the microscope. Major cloud players are boosting capital expenditure — pouring funds into data centers, servers, and chips — while investors question how fast that investment will pay off. Saxo UK investor strategist Neil Wilson flagged “fresh AI bubble fears” after Big Tech revealed AI projects expected to exceed $600 billion this year. 2
Stifel shook things up late in the week with a rare downgrade on Microsoft. Analyst Brad Reback cut the stock to “Hold” from “Buy,” dropping his price target sharply to $392 from $540. He called the 2027 Wall Street forecasts “too optimistic,” citing Azure supply issues and intensifying AI competition. Reback said it’s “time for a break” and raised Stifel’s fiscal 2027 capex forecast to about $200 billion, well above the Street’s roughly $160 billion, while warning of margin pressures. 3
Broader markets attempted to stabilize on Friday following the Nasdaq’s week-long decline, though attention remained fixed on the cost of AI expansion. Amazon’s forecast of a capital spending surge exceeding 50% annually added strain to the sector, following earlier announcements from Microsoft and Alphabet that also unsettled investors. 4
The infrastructure drive is impacting utilities now. WEC Energy plans to increase capital spending by $1 billion over the next five years to ramp up output for Microsoft data centers in Wisconsin. The tech giant has acquired 2,000 acres and secured approvals to add 15 buildings at its Mount Pleasant campus. 5
Regulators are zeroing in on the tech. The UK announced plans to collaborate with Microsoft, academics, and experts to develop a system that can detect deepfake content online. This effort aims to establish detection standards as part of a broader initiative to curb harmful AI-generated material. 6
Since late January, Microsoft’s stock has reacted sharply to shifts in cloud growth and AI spending. The company disclosed record AI expenses in the previous quarter alongside slower cloud expansion. The following day, Reuters reported a 6.2% drop in its shares in Frankfurt, mirroring the decline seen in U.S. after-hours trading. 7
The relief rally could vanish fast if investors reckon the capex surge is still building. Any prolonged supply shortages in Azure, Microsoft’s cloud arm, or hints that clients are postponing software renewals, would intensify the margin concerns—especially since the group’s already priced as a popular AI play.
Next week’s U.S. data calendar will test risk appetite once again. January’s nonfarm payrolls report lands on Wednesday (Feb. 11), followed by the consumer price index on Friday (Feb. 13). Both were delayed due to a brief government shutdown. Edward Jones strategist Angelo Kourkafas noted, “Rotation is the dominant theme this year,” as investors pull back from tech leaders. 8
