Investors Dump Microsoft Shares Despite Largest Earnings Beat in Company History

Core Viewpoint - Microsoft shares have dropped below $400 despite achieving the largest earnings beat in its history, as investors are skeptical about the sustainability of margins from AI spending [1] Financial Performance - Microsoft reported record operating margins of over 47% and a 26% year-over-year growth in cloud revenue [1] - The stock has fallen nearly 17.46% this year, contrasting with Google's decline of only 1.2% and NVIDIA's flat performance [1] Market Sentiment - Retail investor sentiment on Reddit remains neutral at 51.88, indicating confusion regarding Microsoft's future prospects [1] - The market is not questioning Microsoft's operational excellence but is demanding evidence that AI spending will lead to sustainable returns rather than just revenue growth [1] Investor Concerns - There is a significant disconnect between the company's AI infrastructure investment and actual product monetization, leading to a selloff in shares [1] - Investors are looking for concrete proof that Microsoft's AI initiatives will translate into sustainable margins, not just top-line growth [1] Comparison with Competitors - Google has integrated AI into existing profitable products, resulting in a minimal decline in its stock, while NVIDIA has maintained its stock value by selling infrastructure without promising future returns [1] - Microsoft is facing unique challenges as it is being penalized for the gap between its AI infrastructure spending and product adoption [1]