Microsoft’s €320bn rout exposes dark side of the AI binge

Wall Street fears are boiling over as Big Tech's massive AI spending faces intense scrutiny, with investors demanding clear returns to justify high valuations.

Microsoft reported solid earnings on Wednesday, but investors zeroed in on stagnating growth in its Azure cloud-computing business and the more than $100bn (€83.9bn) it’s expected to dole out in capital spending this year.

Wall Street’s apprehension about the cost of developing artificial intelligence technology has been simmering beneath the surface of the stock market for months. Now it’s starting to boil over.

Microsoft reported solid earnings on Wednesday, but investors zeroed in on stagnating growth in its Azure cloud-computing business and the more than $100bn (€83.9bn) it’s expected to dole out in capital spending this year. The next day, the stock tumbled 10%, and the selling continued on Friday, wiping out $381bn (€319.5bn) in market value in two sessions. When all was said and done, Microsoft posted its worst week since March 2020.