Microsoft shares plunge 10% last week

Shares of Microsoft Corp. witnessed their worst single-day drop in nearly six years last Thursday as the 10% fall wiped out nearly $360 billion of the company's market capitalization. That is lower than the total market value of HDFC Bank, ICICI Bank and State Bank of India, which feature among India's biggest banks by market value. Analysts said the tech giant's growing AI spending, weaker-than-expected cloud growth, and reliance on a few large customers raised concerns.

 While Microsoft's quarterly revenue and earnings topped analysts' estimates, worries about the tech giant's cloud growth, coupled with its rising spending on AI and reliance on a few large customers, weighed on the shares.

Notably, as Microsoft and many of its Big Tech peers have boosted spending on AI infrastructure, they have also faced a higher bar to impress investors with their growth.

Morgan Stanley analysts said that while growth from Microsoft's Azure cloud narrowly beat the company's guidance, it grew slower than many on Wall Street anticipated.

During the company's earnings call, CFO Amy Hood stressed that Microsoft’s cloud growth has been held back by capacity constraints, and that Microsoft is investing in building out its AI infrastructure to meet demand, but its higher-than-expected spending has added to concerns.