New York, Jan 30, 2026, 09:50 EST — Regular session
- Microsoft shares climbed roughly 0.5% in early trading, rebounding slightly after Thursday’s sharp decline
- Investors are balancing record AI infrastructure spending with Azure’s growth and profit margins
- On the radar next week: earnings from Alphabet and Amazon, along with the U.S. jobs report for Feb. 6
Microsoft (MSFT.O) shares climbed roughly 0.5% in early Friday trading, reaching about $435.62 as they attempted to recover from a tough day that shook big tech stocks.
The bounce remains modest. The real issue: can Microsoft’s cloud and AI units expand quickly enough to offset increasing costs for data centers and chips?
That question takes on new weight after Microsoft’s recent stumble, which rattled confidence in the AI sector ahead of a packed earnings week. Cloud giants Alphabet and Amazon are set to report next week, with the crucial U.S. jobs report arriving Feb. 6. Jim Baird, chief investment officer at Plante Moran Financial Advisors, noted, “the onus is going to be on them to deliver.” (Reuters)
Microsoft plunged 10% on Thursday, marking its steepest one-day drop since March 2020 and dragging down major indexes. “Microsoft disappointed and there are some genuine concerns that AI investments will eat the software companies’ lunches,” said John Praveen, managing director at Paleo Leon. (Reuters)
Microsoft reported a 17% jump in revenue for the quarter ended Dec. 31, hitting $81.3 billion. Azure and other cloud services saw a 39% boost. The company’s cloud revenue reached $51.5 billion, while its commercial remaining performance obligation—contracted sales yet to be recognized as revenue—more than doubled, climbing 110% to $625 billion. (Microsoft)
Investors zeroed in on spending. Capital expenditures hit $37.5 billion for the quarter, soaring nearly 66% from a year ago. Roughly two-thirds of that was funneled into computing chips—the ones powering AI training and operations. Microsoft also projected Azure revenue growth between 37% and 38% for the upcoming quarter and revealed 15 million annual users now subscribe to its $30-a-month Microsoft 365 Copilot assistant. (Reuters)
That spending has become a patience marathon. Microsoft’s shares plunged Thursday, wiping out over $350 billion in market value. The company faced fresh skepticism after revealing that OpenAI makes up 45% of its cloud backlog. CFO Amy Hood noted that “the KPI would have been over 40%” for Azure growth if the new GPUs had been fully committed to Azure. “They also introduce concentration risk,” said Zavier Wong, an eToro market analyst, pointing to Microsoft’s heavy OpenAI exposure. (Reuters)
Demand showed sparks beyond the usual players. AI startup Perplexity inked a $750 million deal over three years with Microsoft to tap Azure, Bloomberg News reported. Microsoft also confirmed Perplexity picked Microsoft Foundry as its main platform for sourcing models. (Reuters)
Microsoft faces a two-pronged challenge: maintaining Azure’s growth amid stiff competition and shouldering the expenses of expanding its AI infrastructure. At the same time, it’s pushing to boost sales of AI assistants and tools layered onto its current software lineup, making the payoff about more than just cloud expansion.
The downside scenario is straightforward. If chip supply remains constrained, spending stays high, and customer demand fails to pick up, investors could continue to slash the stock over margin concerns — particularly since a significant portion of contracted cloud work hinges on a single high-profile client.
Traders are closely watching if Friday’s early bounce can stick and how fast analysts adjust their forecasts on Azure growth and capital expenditure. The upcoming earnings from Alphabet and Amazon, plus the Feb. 6 jobs report, should set the tone for Microsoft and the wider AI-focused segment of the market next week.
