Microsoft’s AI Investments Trigger Stock Dip Despite Earnings Beat
Microsoft shares experienced a 7% drop in extended trading on January 28, 2026. This occurred despite surpassing earnings expectations, as investors responded to the surge in AI infrastructure costs and a slight deceleration in Azure cloud growth.
The tech behemoth disclosed capital expenditures and finance leases amounting to $37.5 billion for its fiscal second quarter—an increase of 66% year-over-year and surpassing the Wall Street consensus of $34.3 billion. CEO Satya Nadella announced that the company added nearly one gigawatt of total capacity during the quarter to cater to the escalating demand for AI services.
Microsoft reported robust quarterly results, with revenue hitting $81.27 billion (versus the anticipated $80.27 billion). However, Azure cloud services growth was at 39%, aligning with estimates but indicating a slight slowdown from the previous quarter’s 40% growth. The company’s operating margin guidance also fell short of expectations as it continues to invest heavily in AI computing capacity and talent.
“All up, we added nearly one gigawatt of total capacity this quarter alone,” Nadella stated during the earnings call, stressing that customer demand continues to exceed supply. The company projected Azure growth of 37-38% in the current quarter as it balances capacity constraints with the need to serve growing AI workloads across services like Microsoft 365 Copilot and GitHub Copilot.
Source: CNBC