Microsoft stock plunges as Wall Street questions AI investments

The drop comes amid stalling growth for its cloud computing software as OpenAI investments are questioned.Published On 29 Jan 2026Microsoft stock has slumped 12 percent as part of a software industry sell-off, stoking fears of whether hefty investments in artificial intelligence will pay off across the sector.The Redmond, Washington-based tech giant is on track Thursday to finish at its worst day since March 2020 and has seen approximately $400bn in valuation wiped out.Recommended Stories list of 4 itemslist 1 of 4Gold surges past $5,500 amid Iran tensions, weakening US dollarlist 2 of 4Will killings in Minneapolis force another US government shutdown?list 3 of 4Mexico’s oil industry faces new pressures from Venezuela oil under USlist 4 of 4TotalEnergies restarts $20bn LNG project in Mozambique after 5-year freezeend of listOn Wednesday, the company reported a slowdown in growth for its cloud computing product Azure in its earnings report. Capital expenditures grew by 66 percent in the second quarter compared with the same period the year before, reaching a record $37.5bn for the quarter.Meanwhile, Microsoft predicted Azure growth to stay stable in the period from January to March at 37 percent to 38 percent, after slowing in the last three months of 2025, partially due to AI chip capacity constraints.“[Wall Street] wanted to see less cap-ex spending and faster cloud/AI monetisation … and coming out of the gates, it’s the opposite. We have said this is a multi-year journey, and Redmond needs to focus on its data center buildout with more customers heading down the AI path. It’s a balancing act with 2026 the inflection year for AI and MSFT [Microsoft],” Dan Ives, analyst at Wedbush Securities, said in a note provided to Al Jazeera.OpenAI pressure loomsMicrosoft also faced pressure after a disclosure that OpenAI, its prized holding, accounts for 45 percent of its cloud backlog. Investors are worried that some $280bn could be at risk as the unprofitable startup loses momentum in the AI race.