Microsoft shares faced renewed selling pressure Monday as investors questioned whether the company’s aggressive artificial intelligence infrastructure spending can produce sufficient long-term returns. The stock fell 3.04% to $480.35, wiping an estimated $111.8 billion from Microsoft’s market value in a single session. The decline came despite strong operating results and continued momentum across Microsoft’s cloud and AI businesses.
The company reported fiscal fourth-quarter 2026 revenue of $90.01 billion, up 18% year over year, with adjusted earnings of $4.74 per share. Azure revenue grew 43%, surpassing $100 billion annually for the first time, while Microsoft 365 Copilot exceeded 30 million paid seats. However, the market focused on costs: Microsoft spent $115.95 billion on property and equipment during fiscal 2026, up nearly 80% from the previous year, while estimated free cash flow fell 6.5% to $66.99 billion.
Morgan Stanley added to the pressure by raising concerns about hyperscaler creditworthiness as data center, chip, networking, and power costs continue to climb. Microsoft’s drop accounted for an estimated 89 Dow points, about one-third of the Dow Jones Industrial Average’s 0.51% decline, though trading volume about 25% below average suggested repositioning rather than panic.
At the same time, Microsoft approved Horizon 1, the first phase of IREN’s planned 200MW deployment under a cloud agreement valued at about $9.7 billion. IREN shares rose in premarket trading after the approval, highlighting the scale of capacity Microsoft expects to require. Microsoft also expanded its partnership with AMD, bringing newer AMD infrastructure into Azure to reduce reliance on Nvidia-based systems and give customers additional hardware options.
The selloff extended across several major software names: ServiceNow declined 5.08%, Adobe fell 3.78%, and Oracle slipped 2.57%, while semiconductor companies such as Micron Technology and Applied Materials moved higher. Microsoft faces continued competition from Alphabet, Amazon, and Meta, and any shift in OpenAI’s cloud relationships could reduce Microsoft’s perceived advantage. Investors are now demanding clearer evidence that massive AI capital commitments will translate into durable profit growth.
