Microsoft sued by shareholders over Azure and AI spending

Microsoft is facing a class-action securities lawsuit from shareholders who allege the company concealed the true state of its Azure cloud business and the financial demands of its artificial intelligence expansion. The lawsuit, filed in U.S. District Court in Seattle, names Microsoft, Chief Executive Satya Nadella, and Chief Financial Officer Amy Hood as defendants.

The legal action was initiated by the City of St. Clair Shores Police and Fire Retirement System, a Michigan pension fund, on behalf of investors who held Microsoft shares between May 1, 2025, and January 28, 2026. The core allegation is that Microsoft failed to provide investors with a complete picture of Azure's performance and the scale of investment required for its AI strategy during that period.

The lawsuit gained momentum following Microsoft's quarterly earnings report released on January 28, 2026. The company reported that revenue growth for its Azure and other cloud services slowed to 39% in its fiscal second quarter, which ended in December 2025, down from 40% growth in the prior quarter. Microsoft also projected a further deceleration to between 37% and 38% growth for the following quarter. Concurrently,...