Microsoft Corporation (MSFT)’s Capital Expenditures Soar, Cloud Revenue Falls Short of Expectations, and Shares Plummet After Hours

Microsoft Corporation (NASDAQ:MSFT) is among the Ken Fisher Stock Portfolio: 12 Best Stocks to Buy.

As reported by Reuters, the market reacted strongly on January 29, 2026, when Microsoft Corporation (NASDAQ:MSFT) announced unprecedented spending on artificial intelligence along with slower cloud growth. After-hours trading saw a 6.5% decline in shares as data revealed Azure sales surged by 39% in the fiscal second quarter, just marginally above forecasts. The total revenue climbed by 17% to $81.3 billion, but the cost increase was faster at 19%. Capital spending totaled $37.5 billion, up nearly 66% year on year, with around two-thirds going toward computing chips, exceeding expectations.

For the third quarter of the fiscal year, Microsoft Corporation (NASDAQ:MSFT) projects Azure growth of 37% to 38% and total revenue close to $81.2 billion. It revealed for the first time that M365 Copilot has 15 million annual users. The cloud backlog has doubled to $625 billion, with OpenAI accounting for nearly 45% of the total. Investor fears were heightened by competition from Google’s Gemini and other AI rivals, while executives cautioned that growing memory chip costs could put pressure on profitability.

The stock is down by 8.34% YTD as of January 29, 2026.

Microsoft Corporation (NASDAQ:MSFT) creates and licenses consumer and enterprise software.

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Disclosure: None. This article is originally published at Insider Monkey.