Eseandre Mordi
⬤ Microsoft (MSFT) shares have been under pressure lately, dropping about 10% over the past three months and erasing roughly six months of gains. The stock is currently trading near $456.66, down around 3.4% over the past month, showing continued weakness heading into mid-January.
⬤ The main concern driving the selloff is Microsoft's unprecedented capital spending. The company just reported quarterly capex of approximately $35 billion—the highest in its history—with most of that money going toward AI data centers and infrastructure to support its OpenAI partnership and cloud services. What's making investors nervous is that this massive spending spree is happening at the same time several top executives are selling their shares. CEO Satya Nadella, President Brad Smith, and Executive VP Judson Althoff have all sold tens of millions of dollars worth of stock recently. While executive sales aren't unusual, the timing alongside record spending has people talking.
⬤ Competition in the AI space is heating up too. Google's Gemini models have recently beaten ChatGPT in several performance benchmarks, which is shifting investor attention and raising questions about Microsoft's competitive edge as infrastructure costs keep climbing. Adding to the uncertainty, former President Donald Trump said his administration is working with Microsoft to make sure Americans don't end up paying higher utility bills to power all these new data centers. That comment coincided with a roughly 4% drop in the stock in a single day.
⬤ All of this matters because Microsoft has been one of the biggest drivers of overall market performance for the past two years. Now investors are taking a harder look at whether these massive AI investments will actually pay off, and how quickly. The company's struggles could change how Wall Street values tech stocks more broadly, especially when it comes to balancing growth ambitions with financial discipline in the AI race.
Eseandre Mordi
