Microsoft stock plunges as Wall Street questions AI investments

"The drop comes amid stalling growth for its cloud computing software as OpenAI investments are questioned. Microsoft stock has slumped 12 percent as part of a software industry sell-off, stoking fears of whether hefty investments in artificial intelligence will pay off across the sector. The Redmond, Washington-based tech giant is on track Thursday to finish at its worst day since March 2020 and has seen approximately $400bn in valuation wiped out."

"On Wednesday, the company reported a slowdown in growth for its cloud computing product Azure in its earnings report. Capital expenditures grew by 66 percent in the second quarter compared with the same period the year before, reaching a record $37.5bn for the quarter. Meanwhile, Microsoft predicted Azure growth to stay stable in the period from January to March at 37 percent to 38 percent, after slowing in the last three months of 2025, partially due to AI chip capacity constraints."

"Microsoft also faced pressure after a disclosure that OpenAI, its prized holding, accounts for 45 percent of its cloud backlog. Investors are worried that some $280bn could be at risk as the unprofitable startup loses momentum in the AI race. On Wednesday, tech news website The Information reported that Microsoft is set to invest roughly $10bn in OpenAI the maker of ChatGPT as the company continues to accumulate debt. OpenAI holds nearly $100bn in debt."

Microsoft stock fell sharply, declining about 12 percent and wiping out roughly $400bn in market value, marking its worst day since March 2020. Azure reported a slowdown in cloud growth, while capital expenditures jumped 66 percent to a record $37.5bn for the quarter. Microsoft forecasted Azure growth of 37–38 percent for January–March, citing recent slowing and AI chip capacity constraints. Investors expressed concern after disclosure that OpenAI accounts for 45 percent of Microsoft’s cloud backlog and amid reports Microsoft may invest about $10bn as OpenAI accumulates nearly $100bn in debt.

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