Microsoft stock pullback accelerates
Microsoft shares slid about 7% this week and are down more than 25% year‑to‑date as investors fret over intensifying cloud competition and uncertainty around AI regulation and market leadership. The drop highlights growing market nervousness about dominance in cloud and AI platforms rather than company‑specific operational news. (indexbox.io)
Microsoft reported $81.3 billion in revenue for the quarter ended Dec. 31, 2025, with Microsoft Cloud at about $51.5 billion and Azure and other cloud services growing roughly 39% year‑over‑year. (microsoft.com) The company spent about $37.5 billion on capital expenditures and finance leases in that quarter, with management saying roughly two‑thirds of that was for short‑lived AI hardware such as GPUs and CPUs. (fool.com) Bloomberg and several analyst models peg Microsoft’s fiscal‑2026 capital spending — including leases — at roughly $146 billion, a jump that has intensified investor scrutiny of near‑term returns on AI infrastructure. (bloomberg.com) Microsoft consolidated its consumer and commercial Copilot teams in mid‑March, elevating Jacob Andreou to lead the unified Copilot experience reporting to CEO Satya Nadella while Mustafa Suleyman shifts to focus on frontier model development. (blogs.microsoft.com) Regulatory pressure has also tightened: the European Commission launched DMA market investigations into AWS and Microsoft Azure, and the U.K. CMA’s provisional findings recommended further scrutiny of cloud incumbents for features that may “prevent, restrict or distort” competition. (digital-markets-act.ec.europa.eu) Analysts have trimmed targets in recent weeks — UBS cut its 12‑month target to $510 on March 25, 2026 — and specialist shops such as Melius have also lowered expectations amid the Copilot reorg and AI‑spend concerns. (benzinga.com) Market positioning shifted too: reported short interest rose to roughly 79.8 million shares in the March 13 filing, and consensus 12‑month price targets across brokers remain clustered near the high‑$500s, leaving room for polarized views on valuation. (marketbeat.com) Legal and partnership uncertainty adds another variable after reports that Microsoft has weighed legal action over a reported $50 billion Amazon‑OpenAI cloud deal, even as Microsoft holds about a 27% stake in OpenAI following last year’s restructuring. (finance.yahoo.com)
