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Microsoft shares fell about 10% in Thursday trading, erasing roughly $357 billion in market value in a single session. The decline marked the stock’s biggest one-day drop since March 2020.
The selloff followed Microsoft’s earnings release, which showed record artificial intelligence (AI) spending as growth slowed at its closely watched Azure cloud unit. Consequently, the move intensified investor focus on how quickly large AI investments can produce returns.
Microsoft Corp. ended the session down about 10%, cutting its market capitalization by roughly $357 billion. The decline left the company valued at about $3.22 trillion at Thursday’s close.
The one-day value loss ranked among the largest single-session market cap declines on record for a US stock. The slide also exceeded the market capitalizations of the vast majority of S&P 500 Index members.
The weakness extended beyond Microsoft during the session. Several mega-cap peers also saw sharp intraday valuation swings, although some recovered into the close.
Microsoft’s results highlighted an aggressive buildout of AI infrastructure. Capital expenditures rose 66% in the most recent quarter to a record $37.5 billion.
Azure and other cloud services grew 39%, slightly below StreetAccount’s 39.4% consensus estimate. Meanwhile, Microsoft projected about $12.6 billion in fiscal third-quarter revenue from the More Personal Computing segment, which includes Windows, below StreetAccount’s $13.7 billion consensus.
Chief Financial Officer Amy Hood said data center capacity allocation influenced reported Azure growth. She said the growth metric would have exceeded 40% if Microsoft had assigned newly available graphics processing units (GPUs) to Azure instead of internal needs.
Microsoft also said it prioritizes internal applications when it allocates computing power, although some internal efforts have not become breakout hits. Still, Hood said capital expenditures should decline slightly in the current quarter.
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The sharp market reaction reflected growing skepticism about how fast AI spending converts into sustained profit. Investors have questioned whether the scale of AI capital outlays across Big Tech will deliver acceptable return on investment (ROI) within typical market timeframes.
Matthew Maley, Chief Market Strategist at Miller Tabak + Co., said the market may need to revalue the shares if Microsoft cannot generate a strong ROI from its AI investment. His view followed results that paired strong performance with elevated spending.
Analyst Ben Reitzes said Microsoft should accelerate data center construction to improve Azure execution. He said the company needs to build up buildings faster to meet demand.
UBS analysts led by Karl Keirstead questioned Microsoft’s decision to secure AI capacity for products such as Microsoft 365 Copilot, the productivity add-on. They also said their checks did not suggest a strong usage ramp and said Microsoft needs to prove the investments.
Other analysts defended Microsoft’s approach and framed the capacity choices as long-term oriented. They said management focused on durable positioning rather than optimizing near-term growth rates while constraints persist.
The broader software segment also weakened. The iShares Expanded Tech-Software Sector exchange-traded fund (ETF) dropped 5%, while the tech-heavy Nasdaq Composite Index finished down 0.7%.
In contrast, Meta shares jumped about 10% after its results and quarterly revenue outlook impressed analysts. The divergence underscored how markets currently reward clearer evidence that AI spending supports revenue performance.
Microsoft has seen only a handful of larger one-day percentage declines since its 1986 initial public offering. Those outsized moves occurred during episodes such as Black Monday in 1987, the dot-com era, and the 2020 pandemic selloff.
