NEW YORK, Feb 4, 2026, 09:31 EST — Regular session
- Microsoft shares dropped roughly 3% in early trading, adding to a volatile run for megacap tech stocks.
- Investors are pulling back from software stocks amid fresh concerns over “AI disruption.”
- Alphabet reports after the bell, followed by Amazon on Thursday — both closely watched for clues on cloud demand.
Microsoft Corp shares dropped 2.9% to $411.21 in early Nasdaq action Wednesday, slipping from an opening price of $422 and hitting a low of $408.94. That put the stock $12.12 below its last close.
The plunge is significant since Microsoft is now seen as a stand-in for the AI surge — and the costs tied to it. When software sentiment shifts, the stock’s size makes it impossible for major indexes to look the other way.
Anthropic has just launched plug-ins for its Claude Cowork agent—tools that allow the AI assistant to link up with apps and automate tasks in fields like legal, sales, and data analysis. “The sector isn’t just guilty until proven innocent but is now being sentenced before trial,” J.P. Morgan analyst Toby Ogg noted. Nvidia CEO Jensen Huang dismissed the notion that AI will replace software as “illogical,” while other analysts observed investors pulling back from the space. Reuters
Microsoft isn’t solely a legal publisher or data-analytics provider, yet it remains central to enterprise spending. Its drive into AI tools drags it into the same arguments about winners, losers, and the pace of change.
Microsoft’s recent earnings outlook remains in focus. The tech giant reported $37.5 billion in capital spending for the October-December quarter. It also projects Azure revenue to grow between 37% and 38% in the current quarter. CFO Amy Hood cautioned that rising memory-chip costs might pressure cloud margins down the line. Reuters
That capex question ties directly to competition. Azure is gunning for demand that’s also going to Amazon Web Services and Google Cloud, and investors have grown less patient with any hint that spending is outpacing returns.
Macro signals showed a split picture. ADP reported a 22,000 increase in U.S. private payrolls for January. The official Bureau of Labor Statistics jobs report, however, remains postponed due to the recent partial government shutdown. This leaves traders relying on less definitive data. Reuters
The downside is straightforward: if AI tools push software prices down quicker than companies can adapt, multiples will shrink. For Microsoft, uncertainty over whether cloud growth will outpace capital spending keeps investors fixated on costs instead of the story.
Alphabet is set to report earnings after the bell and will host its 2025 Q4 call at 1:30 p.m. PT (4:30 p.m. ET). Alphabet Investor Relations
Amazon is up next on Thursday, scheduled to release its Q4 2025 earnings at 2:00 p.m. PT (5:00 p.m. ET). Investors will be watching closely for any signals about cloud demand, which could influence how Azure-related stocks perform. ir.aboutamazon.com
