Why Microsoft Stock Plunged on Thursday

Shares of Microsoft (NASDAQ: MSFT) were taken retired to the woodshed Thursday morning, plunging arsenic overmuch arsenic 12.6%. As of 11:58 a.m. ET, the banal was inactive down 11.8%.

The catalyst that sent the tech elephantine tumbling was its quarterly net report. Despite delivering coagulated results, investors wanted more.

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For its fiscal 2026 2nd 4th (ended Dec. 31), Microsoft delivered gross of $81.3 billion, an summation of 17% twelvemonth implicit twelvemonth and 15% successful changeless currency. This drove adjusted net per stock (EPS) to $4.14, an summation of 24% oregon 21% successful changeless currency. The adjusted results excluded the interaction of its OpenAI investment.

For context, analysts' statement estimates were calling for gross of $80.3 cardinal and EPS of $3.92, truthful Microsoft easy surpassed Wall Street's expectations.

Overall, Microsoft's large concern units delivered. The company's productivity and concern processes conception grew gross by 16% to $34.1 billion, portion the much idiosyncratic computing conception delivered gross of $14.3 billion, a diminution of 3%. Intelligent unreality gross of $51.5 cardinal accrued 29%, portion Azure Cloud accrued 39%. All 3 segments edged past expectations, but investors wanted more.

There was besides immoderate interest astir Microsoft's superior expenditures (capex) of $37.5 cardinal successful Q2, up from $26.6 cardinal successful the prior-year quarter. Microsoft continues to conflict to proviso capable unreality and information halfway capableness to conscionable existing AI demand. Management continues to equilibrium capex spending against AI request arsenic it builds retired its information halfway infrastructure -- wherever astir each its AI services reside.

After today's shellacking, Microsoft's trailing 12-month price-to-earnings (P/E) ratio has fallen to 30, putting it successful enactment with galore of the different tech giants. Management noted that its unreality and AI maturation would alteration from 4th to 4th arsenic further capableness comes online and that Microsoft is gathering for the agelong term.

As such, I presumption today's drubbing arsenic a buying opportunity, peculiarly for semipermanent investors. Nothing to spot here, folks. Move along.

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