Microsoft Shares Plummet 11%—Most Since 2020—After Slowing Cloud Growth

Core Insights - Microsoft's stock experienced a significant decline of 11.9%, marking its worst single-day loss in nearly six years, primarily due to disappointing growth in its cloud-computing unit [1] - The company reported quarterly revenue of $81.27 billion and earnings per share of $4.14, exceeding Wall Street's estimates, but Azure's growth rate slowed to 39% from 40% in the previous quarter [2] - Capital expenditures for the quarter reached $29.8 billion, significantly higher than the projected $23.4 billion, raising concerns among investors [2][3] Financial Performance - Quarterly revenue was reported at $81.27 billion, surpassing estimates of $80.3 billion [2] - Earnings per share were $4.14, exceeding the expected $3.91 [2] - Azure's annual growth rate was 39%, slightly above the expected 38.4%, but down from 40% in the previous quarter [2] Capital Expenditures - Microsoft reported capital expenditures of $29.8 billion for the quarter, well above the anticipated $23.4 billion [2] - Analysts noted that the faster-than-expected growth in capital expenditures is a core issue affecting investor sentiment [3] Market Context - Microsoft shares had previously increased by over 15% in 2025, benefiting from AI investments, and the company was valued at $4 trillion after its second-quarter earnings in July 2025 [4] - The company has been increasing spending on data center capacity but has struggled to meet demand, leading to lowered internal expectations for AI product demand [4] Upcoming Earnings Reports - Microsoft, along with Meta and Tesla, was among the first of the "Magnificent Seven" to report earnings, with Apple scheduled to release its fiscal data soon [5]