Microsoft suffers $452 billion stock rout as investors question AI spending
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Microsoft shares plunged 10 per cent on Jan 29, its loss in market value the second-largest for a single session in stock market history.
PHOTO: REUTERS
NEW YORK – Microsoft shares got caught up in a sell-off on Jan 29 that wiped out US$357 billion (S$452 billion) in value, the second largest for a single session in stock market history.
The software giant’s stock closed down 10 per cent, its biggest plunge since March 2020, following its earnings report after the bell on Jan 28, which showed record spending on artificial intelligence (AI) as growth at its key cloud unit slowed.
The only bigger one-day valuation destruction was Nvidia’s US$593 billion rout in 2025 after the launch of DeepSeek’s low-cost AI model. Microsoft’s lost market value is larger than the market capitalisations of more than 90 per cent of S&P 500 Index members, according to data compiled by Bloomberg.
The chill was felt elsewhere as well, with peers including Alphabet and Nvidia each shedding more than US$100 billion at one point on Jan 29. Alphabet shares recovered, closing up 0.7 per cent, while Amazon settled down 0.5 per cent.
The sell-off comes amid heightened scepticism 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 per cent rise in capital expenditures in its most recent quarter to a record US$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 (return on investment) from their massive AI investment, their shares need to be revalued back down to a level that is more consistent with its historical fair value,” said Mr Matthew Maley, chief market strategist at Miller Tabak + Co.
Microsoft’s sell-off in percentage terms 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 fuelled sell-off in 2020. BLOOMBERG
