Microsofts $357 Billion Rout Is Worst Since Deepseek Hit Nvidia

Core Viewpoint - Microsoft Corp. experienced a significant selloff, resulting in a loss of $357 billion in market value, marking the second-largest single-day valuation drop in stock market history [1][2]. Group 1: Market Impact - The stock closed down 10%, the largest decline since March 2020, following disappointing earnings that highlighted record spending on artificial intelligence while growth in its cloud unit slowed [1][4]. - This selloff is notable as it surpassed the market capitalizations of over 90% of S&P 500 Index members, indicating a substantial impact on the market [2]. Group 2: Industry Reaction - Other tech giants, including Alphabet Inc. and Nvidia, also faced significant losses, with each shedding more than $100 billion at one point during the selloff [3]. - Alphabet shares managed to recover slightly, closing up 0.7%, while Amazon's shares settled down 0.5% [3]. Group 3: Financial Performance - Microsoft reported a 66% increase in capital expenditures in the most recent quarter, reaching a record $37.5 billion, but the growth of its Azure cloud-computing unit showed signs of slowing [4]. - Analysts express skepticism regarding the return on investment from Microsoft's substantial AI spending, suggesting a need for reevaluation of the company's stock price to align with its historical fair value [5]. Group 4: Historical Context - The recent selloff is among the worst in Microsoft's history, comparable to significant market declines during events such as Black Monday in 1987 and the dot-com bubble [6].