Microsoft Shares Plunge 10%, Wiping Out Nearly $360 Billion in Market Value

By

Updated January 29, 2026

04:47 PM EST

The Microsoft campus in Mountain View, California, US, on Monday, Jan. 26, 2026. — Microsoft revealed that nearly half of its backlog was attributable to OpenAI.
David Paul Morris / Bloomberg / Getty Images

Key Takeaways

Microsoft shares slumped Thursday, despite quarterly revenue and earnings that topped estimates.
Analysts said the tech giant's growing AI spending, weaker-than-expected cloud growth, and reliance on a few large customers raised concerns.

Microsoft (MSFT) shares took a big hit after the company reported earnings yesterday.

The shares dropped 10% Thursday to close at $433.50, leading losses on the Dow Jones Industrial Average and the Nasdaq. Thursday's rout wiped nearly $360 billion off Microsoft's market capitalization, the second-largest loss on record, topped only by Nvidia's nearly $600 billion crash during last January's Deepseek panic. (Read Investopedia's full coverage of today's trading here.)

While Microsoft's quarterly revenue and earnings topped analysts' estimates, worries about the tech giant's cloud growth, coupled with its rising spending on AI and reliance on a few large customers, weighed on the shares.

Why This Matters to Investors

As Microsoft and many of its Big Tech peers have boosted spending on AI infrastructure, they've also faced a higher bar to impress investors with their growth.

Morgan Stanley analysts said that while growth from Microsoft's Azure cloud narrowly beat the company's guidance, it grew slower than many on Wall Street anticipated.

During the company's earnings call, CFO Amy Hood stressed that Microsoft’s cloud growth has been held back by capacity constraints, and that Microsoft is investing in building out its AI infrastructure to meet demand, but its higher-than-expected spending has added to concerns.

Microsoft also revealed that nearly half of its backlog was attributable to OpenAI. Jefferies analyst Brent Thill said on CNBC following the results that the detail underscored worries about concentration risks and OpenAI's ability to pay its hundreds of billions of dollars in commitments.

Related Education

How Microsoft Makes Money

Guide to Selecting the Best Artificial Intelligence Stocks

An illustration of a stock certificate with dollar signs and a gold ribbon surrounded by red star shapes.

Still, Jefferies and Morgan Stanley said they said they see gains ahead for the shares. Though analysts' ratings are in flux, most have bullish ratings for Microsoft, with 14 of the 15 analysts tracked by Visible Alpha calling the stock a "buy," compared to one neutral rating. Their average price target around $598 would imply nearly 40% upside from Thursday's close.

Update—January 29, 2026: Stock prices in this article were updated after markets closed on Thursday.

Do you have a news tip for Investopedia reporters? Please email us at

[email protected]

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

Morgan Stanley. "2Q26 Results – Not Seeing the Forest for the Trees."

Take the Next Step to Invest

The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.

Key Takeaways

Why This Matters to Investors

Related Education

Related Articles