Microsoft experienced a historic stock decline on Thursday, marking the largest single-day dollar loss in its history, erasing $357 billion from its market capitalization. Following a strong earnings report for the second quarter of fiscal 2026, the stock fell as much as 12% in trading, ultimately closing at $433.50, down 10%.
Despite reporting a 17% increase in revenue to $81.3 billion and adjusted earnings of $4.14 per share, the market reacted negatively, which includes a significant miss on the growth rate of its Azure cloud platform, which expanded by 38% against Wall Street expectations of 39.4%.
Moreover, capital spending surged to $37.5 billion, a 66% increase year-over-year, raising concerns over the risks associated with competing in the AI space against major players like Amazon and Google. Microsoft CEO Satya Nadella highlighted the rapid growth of the AI sector within the company, stating that its AI business is already larger than some of its longstanding franchises.