Microsoft Corp. shares got caught up in a selloff Thursday that wiped out $357 billion in value, second-largest for a single session in stock market history.
The software giant’s stock closed down 10%, its biggest plunge since March 2020, following Microsoft’s earnings after the bell Wednesday, which showed record spending on artificial intelligence as growth at its key cloud unit slowed.
The only bigger one-day valuation destruction was Nvidia Corp.’s $593 billion rout last year after the launch of DeepSeek’s low-cost AI model. Microsoft’s move is larger than the market capitalizations of more than 90% of S&P 500 Index members, according to data compiled by Bloomberg.
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The chill was felt elsewhere as well, with peers including Alphabet Inc. and Nvidia each shedding more than $100 billion at one point on Thursday. Alphabet shares recovered, closing up 0.7%, while Amazon settled down 0.5%.
The selloff comes amid heightened skepticism from investors that the hundreds of billions of dollars Big Tech is spending on AI will eventually pay off. Microsoft’s results showed a 66% rise in capital expenditures in its most recent quarter to a record $37.5 billion, while growth at its closely tracked Azure cloud-computing unit slowed from the prior quarter.
“Since it is becoming even more evident that Microsoft is not going to garner a strong ROI from their massive AI investment, their shares need to be revalued back down to a level that is more consistent with its historic fair value,” said Matthew Maley, Chief Market Strategist at Miller Tabak + Co.
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Microsoft’s selloff is among the worst in its history. Since its initial public offering in 1986, the stock has only seen a handful of days with bigger declines, including on Black Monday in 1987, during the dot-com bubble, and at the height of the Covid 19 fueled selloff in 2020.
