Microsoft Shares Fall 23% in Early 2026 on AI Costs

Microsoft Corporation's shares have experienced a sharp decline in early 2026, falling more than 23 percent since the start of the year and trading at around 372 as of early April. The technology giant, a leader in cloud computing and productivity software, has underperformed the broader market amid investor concerns over rising artificial intelligence investments, marking its worst first-quarter drop since 2008.

The selloff accelerated following Microsoft's fiscal second-quarter earnings release on January 28, when shares dropped nearly 10 percent despite the company surpassing expectations. It reported earnings per share of 4.14, beating the consensus estimate of 3.86, and revenue of 81.27 billion, exceeding forecasts of 80.28 billion. Revenue grew 16.7 percent year over year, driven by strong performance in its Azure cloud division, which posted 39 percent growth. However, capital expenditures nearly doubled to 29.88 billion, fueling worries that heavy spending on AI infrastructure may not yield returns quickly enough. Azure's growth has shown signs of deceleration, with projections for 37 to 38 percent in the next quarter, down from 40 percent earlier in the fiscal year.