NEW YORK, Jan 14, 2026, 16:04 EST — After-hours
- Microsoft shares dipped, underperforming a wider slide in U.S. tech stocks
- Power and water consumption in data centers have become central issues in the AI buildout debate
- All eyes turn to Jan. 28 earnings for signs on AI investment and cloud demand
Microsoft (MSFT.O) shares dropped 2.6% on Wednesday, deepening a retreat in mega-cap tech amid investor concerns over the escalating expenses — and political hurdles — tied to building new AI data centers. The stock lost $12.17 to close at $458.50 in late U.S. trading. Meanwhile, the Invesco QQQ fell 1.3%, and the SPDR S&P 500 ETF slipped 0.7%.
Just a day earlier, Microsoft announced it would pay utility rates high enough to cover its own power costs at U.S. data centers and collaborate with local utilities to boost supply as needed. The company also vowed to replenish more water than its sites consume and to release water-use data for each U.S. data-center region. Vice chair and president Brad Smith called it “unfair … for our industry to ask the public to shoulder added electricity costs for AI.” Reuters
The shift comes as investors look past software in their AI plays. BlackRock noted clients aiming for 2026 AI opportunities are favoring energy and infrastructure firms instead of the major tech companies building data centers. Ibrahim Kanan, the firm’s head of core U.S. equity, emphasized the importance of “risk-managing megacap and AI exposure.” Reuters
Washington has brought this issue to the forefront. On Monday, President Donald Trump announced that Microsoft will implement “major changes” this week to prevent data centers from driving up consumers’ electricity bills. He emphasized, “I never want Americans to pay higher Electricity bills because of Data Centers.” Reuters
The race for AI infrastructure churned out new headlines Wednesday. OpenAI struck a deal to purchase up to 750 megawatts of computing power from chip startup Cerebras over three years, a source told Reuters, pegging the contract’s value north of $10 billion. OpenAI said the partnership aims to “make our AI respond much faster.” Reuters
Positioning may be fueling the volatility. Hedge funds stayed heavily long and crowded into bets on Alphabet, Microsoft, and Meta, according to data provider Hazeltree. (“Long” means expecting a stock to rise, while “crowding” signals many funds backing the same trade.) Reuters
Not everyone on Wall Street is pulling back. A KeyBanc reseller poll highlighted by Barron’s showed customer IT budgets set to increase 5.3% in 2026. Analyst Eric Heath noted that quicker public-cloud spending could provide “a tailwind for Azure” beyond GPUs, as Microsoft ramps up Copilot and other AI tools within corporate software spending. Barron’s
Microsoft’s newest promises don’t come with a clear price attached. The company hasn’t detailed what higher utility rates or water replenishment efforts will cost. If power prices spike or regulators tighten rules, investors could fret the expenses will climb faster than the revenue does.
Microsoft is set to release its fiscal 2026 second-quarter results after the market closes on Jan. 28. The earnings call follows at 2:30 p.m. Pacific, featuring remarks from CEO Satya Nadella and CFO Amy Hood.
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