Microsoft beat its second-quarter earnings expectations — and its stock fell anyway. According to Yahoo Finance, shares plummeted as investors shifted their attention away from headline results and toward the company's mounting AI infrastructure costs and signs of slowing cloud growth.
The drop was severe. According to CNBC, Microsoft shares sank 10% before stabilizing the following day. The sell-off left the stock trailing its Big Tech rivals on the year, according to both The Motley Fool and Yahoo Finance.
The spending numbers are part of what unnerved markets. According to CNBC, Microsoft is projecting $190 billion in capital expenditures for 2026, a figure tied in part to soaring memory prices driven by AI infrastructure demand. Wells Fargo, according to Barchart.com, has warned that surging AI token costs could be a serious headwind for hyperscalers like Microsoft and Meta.
The turbulence has now triggered legal consequences. According to Yellow.com, Microsoft faces a class action lawsuit over AI-linked stock losses. A Yahoo Finance report adds that the lawsuit is testing Microsoft's AI narrative while the stock trades below what some analysts estimate as fair value.
Opinions among professional investors remain split. Morningstar has placed a $600 price target on the shares. The Motley Fool has called it a buying opportunity. Meanwhile, according to Yahoo Finance, hedge fund manager Ken Griffin counts Microsoft among his top AI stock holdings.
On June 11, shares fell again, according to The Motley Fool, as questions about AI spending levels collided with reports of restructuring at Microsoft's Xbox division.
The story captures a core tension gripping the entire AI trade: investors are simultaneously demanding AI growth and punishing the capital spending required to deliver it.