On the day, US stocks fell immediately after the opening bell, with the sharp drop in Microsoft stock weighing on major indexes, with the S&P 500 falling about 0.8%. Microsoft shares fell more than 11% in early trading, the steepest intraday decline since March 2020.
The stock fell after Microsoft released its second-quarter earnings report after the bell on Wednesday. The company beat Wall Street expectations on both revenue and profit, with cloud revenue exceeding $50 billion for the first time.
Despite the strong results, investors reacted negatively due to concerns that cloud growth would slow and AI-related capital spending would continue to rise.
Microsoft has been one of the biggest beneficiaries of the AI boom thanks to its early investment in OpenAI, and its market capitalization briefly exceeded $4 trillion in July. The stock has since fallen as investors reassess the pace of returns from heavy investments in AI infrastructure.
The Nasdaq Composite Index fell about 1.6% in early trading, dragged down by Microsoft’s decline. Other big tech stocks were also weak, with Tesla shares falling nearly 2% after the automaker reported its first-ever annual sales decline.
The move increases pressure on Apple, which is scheduled to report earnings after the bell on Thursday, as investors seek reassurance about growth across the broader technology sector.