Microsoft Shares Drop 8.35% on Post-Earnings Selloff, AI Spending Fears

The share price fell to its lowest level since September 2025 today, with an intraday decline of 0.77%.

Microsoft’s shares have now fallen for eight consecutive sessions, dropping 8.35% over the period. The recent weakness follows a 5% post-earnings selloff in late October, driven by concerns over the company’s $34.9 billion in Q3 capital expenditures and aggressive spending on AI infrastructure. Additionally, a 6,000-employee workforce reduction announced in May 2025 highlighted cost discipline measures amid macroeconomic uncertainty, though analysts remain optimistic about Azure’s 39% year-over-year revenue growth and the company’s $80 billion cash reserves.

Despite the near-term volatility, all 34 covering analysts maintain a “Buy” rating, with a median price target of $634.87 implying 25% upside from current levels. Strategic partnerships, including a $15.2 billion AI chip deal in the UAE and a multi-cloud alliance with Oracle, are seen as catalysts for long-term expansion. However, risks include rising hardware costs, valuation concerns amid a $2 trillion market cap, and competitive pressures in the AI sector. The stock’s 8.35% drop since October underscores the market’s balancing act between Microsoft’s transformative investments and short-term profitability.