Microsoft Stock Plunge Wipes Out $357 Billion Market Cap

Microsoft’s stock experienced a dramatic decline, wiping out $357 billion in market capitalization. This marks the largest loss since March 2020, driven by investor concerns over Azure AI growth figures and high capital expenditures.

Key figures involved include Microsoft’s CEO, Satya Nadella, who reported Azure growth at only 39%, which is below the consensus. In response, the company is prioritizing internal AI R&D over cloud revenue advancements.

The immediate effects were stark, with Microsoft shares dropping approximately 10-12% in late January 2026. This focus shift reflects decisions to invest heavily in AI and data centers, elevating concerns about future returns.

Financially, Microsoft’s significant capital allocation to AI infrastructure has sparked apprehension among investors. Analysts have noted that the current fiscal strategy might initially weaken confidence in sustainable growth prospects in tech markets.

This fiscal strategy reinforces the need for robust growth in AI contributions to justify spending. Microsoft emphasizes AI’s long-term potential to transform its business model despite short-term stock volatility.

Historical parallels show similar market reactions, like NVIDIA’s previous loss due to AI shifts. A focus on AI, despite current stock dips, underscores a broader strategic direction with potentially beneficial returns in the future.

“While Azure continues to show growth, our focus on internal AI initiatives is essential for long-term value creation, overshadowing immediate cloud demand.” – Satya Nadella, CEO, Microsoft, Earnings Call Transcript