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Microsoft stock drops 7% on slowing cloud growth, light margin guidance
Microsoft's Azure cloud revenue rose 39%, but heavy AI infrastructure spending pushed capital expenditures up 52%, raising investor concerns despite strong earnings per share of $4.13.
- This week, Microsoft Corp. shares slid more than 7% in after‑hours trading after the company reported Q2 fiscal 2026 earnings, as investors reacted to guidance flagging cloud margin pressure and slowing growth.
- Microsoft’s AI infrastructure push has required higher capex, raising FY2026 spending to address a $392 billion backlog and a $625 billion commercial remaining performance obligation.
- Quarterly figures highlighted cloud scale but flagged accounting quirks and one‑time gains, with $81.3 billion revenue, $4.14 non‑GAAP EPS, Intelligent Cloud at $32.9 billion, and GAAP profit including $7.6 billion from the OpenAI investment.
- After the report, some analysts trimmed targets, with Stifel recently cutting its price target to $520 citing margin concerns, while the consensus of 34 analysts is $615.91 and Wedbush maintained a $625 target.
- Going forward, the focus will be on whether Azure growth justifies Microsoft’s massive capex outlays as analysts polled by Visible Alpha expect $34.31 billion quarterly capex, up about 52%.
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technewstube.comMicrosoft tops US$50b cloud milestone as AI capex surges and Copilot adoption accelerates
Microsoft's earnings conference call for the fiscal second quarter of 2026 underscored a company accelerating into an AI-first era—while also confronting investor scrutiny over the scale of its infrastructure spending.
Coverage Details
Total News Sources23
Leaning Left1Leaning Right4Center9Last UpdatedBias Distribution64% Center
Bias Distribution
- 64% of the sources are Center
64% Center
C 64%
R 29%
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