Microsoft reported a 66% increase in second-quarter capital spending. The company projects total capital expenditures will reach nearly $105 billion for the fiscal year ending in June. This aggressive investment strategy mirrors spending by peers Alphabet and Amazon.
Investor concerns over profitability and capital discipline have triggered a significant sell-off in technology stocks. Microsoft shares declined amid this broader re-evaluation of the artificial intelligence landscape.
Stifel downgraded MSFT stock from buy to hold on February 5. The firm cited concerns that Microsoft Azure's growth may struggle to accelerate in the near term. Analysts highlighted the pressure of the current heavy investment cycle on the company's outlook.