Microsoft stock just crashed $360 billion in a day; Here's why

Core Viewpoint - Microsoft experienced a significant stock decline of nearly 10% in a single day, resulting in a market capitalization drop of approximately $360 billion, despite reporting strong earnings shortly before the decline [1][2][4]. Financial Performance - Microsoft reported an adjusted earnings per share (EPS) of $4.14, exceeding the expected $3.97, and revenue of $81.27 billion, surpassing the forecast of $80.27 billion [4]. - The company's cloud services, including Azure, grew by 39%, aligning with expectations [5]. Investor Sentiment - Despite strong earnings, investor sentiment was negatively impacted by a lower-than-expected implied fiscal third-quarter operating margin of 45.1% and a gross margin that fell to a three-year low of 68% [7]. - A notable 9.5% drop in gaming revenue contributed to investor unease, alongside concerns that 45% of Microsoft's backlog is tied to OpenAI, raising fears about dependency on a single entity [8][10]. Market Dynamics - The discussion surrounding OpenAI has intensified, with concerns about its financial sustainability and the potential for an AI bubble, leading to increased selling pressure on Microsoft shares [9][10]. - Microsoft's aggressive integration of its Copilot AI into software has led to a perception of diminishing goodwill among users, with some referring to the company as "Microslop" [11][13].