Microsoft suffered immediate financial losses when its stock price crashed during multiple hours of trading. The company's stock price experienced a 12 percent decline at one specific moment. The market capitalization dropped nearly $400 billion because of this stock price decline. The company lost financial value which amounts to approximately ₹36 lakh crore in Indian currency. The event represents the second largest one-day stock market decline in all of history.
Microsoft Market Losses Occur Only During Exceptional Cases
Microsoft has encountered its largest financial loss since March 2020. The company has not faced this degree of financial loss since it went public in 1986. The previous major record was set in January last year when Nvidia lost $593 billion following the launch of China’s DeepSeek AI model.
Investor Concerns Over AI Spending
- Microsoft suffered a decrease in investor trust because of their artificial intelligence spending. Shareholders are questioning the returns from the large investments made in AI and new technologies. Microsoft increased its cloud and AI expenditures by 66 percent during the recent quarter.
- Microsoft experienced decreased growth in its Azure cloud platform which reached lower levels than its previous quarter performance. The company stock price dropped because the slowdown in business operations created additional market uncertainties.
Industry-Wide AI Investment Pressure
- Major technology companies, including Google, Meta, Microsoft, and Amazon, plan to increase spending on artificial intelligence in the coming year. Most of this investment will focus on data centers. Except for Google, these companies are using borrowed funds to support their AI expansion plans.
- OpenAI has stated that it may need up to $1.4 trillion in investment over the coming years. The company has also said it does not expect to become profitable before 2030. This long timeline for returns is increasing uncertainty among investors across the technology sector.
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