Microsoft's market capitalization falls by $357 billion, its stock price suffers its biggest drop since 2020
Following the announcement of Microsoft's second quarter financial results for fiscal year 2026, released on January 28, 2026, Microsoft's stock price fell by approximately 10%. This is believed to be due to significantly lower growth rates for cloud services and other services.
FY26 Q2 - Press Releases - Investor Relations - Microsoft
Microsoft lost $357 billion in market cap in earnings plunge
https://www.cnbc.com/2026/01/29/microsoft-market-cap-earnings.html
Microsoft Q2 earnings beat, but stock plummets as investors fret on AI spend, cloud growth
https://finance.yahoo.com/news/microsoft-q2-earnings-beat-but-stock-plummets-as-investors-fret-on-ai-spend-cloud-growth-154618162.html
Microsoft reports strong cloud earnings in Q2 as gaming declines | The Verge
https://www.theverge.com/ad/861493/reolinks-floodlight-cameras-offer-video-search-without-a-subscription
According to Microsoft's financial results for the second quarter of fiscal year 2026 (the three months ending December 31, 2025), the company's revenue was $81.3 billion (approximately 12.49 trillion yen), an increase of 17% from the same period last year, and operating profit was $38.3 billion (approximately 5.88 trillion yen), an increase of 21% from the same period last year. Earnings per share were $5.16 (approximately 790 yen), which, together with revenue, significantly exceeded market expectations. However, Microsoft shares fell about 10% after the financial results were announced, marking their sharpest drop since March 2020.
Investors blame a number of factors, including revenue from its More Personal Computing division, which includes cloud services and Windows licenses, which grew 39% year-over-year but missed market expectations. 'For those who were hoping for a higher number, it probably wasn't enough,' said Rishi Jallia of RBC Capital Markets.
'Our cloud performance would have been even better if we had allocated more of our data center infrastructure to customers rather than prioritizing internal demand,' said Microsoft Chief Financial Officer Amy Hood. 'If we had allocated all of the GPUs we activated in the first and second quarters to Azure, our growth would have exceeded 40 percent.'
Additionally, Xbox hardware revenue has declined for three consecutive years, and this downward trend is expected to continue into fiscal year 2026. Xbox content and services, including Xbox Game Pass, also saw a 5% decline.
Due to the stock price movement, Microsoft's market capitalization fell by $357 billion (approximately 54.83 trillion yen).
'Microsoft needs to focus more on building data centers,' said Ben Reitzes, an analyst at Melius Research with a Buy rating on Microsoft shares. 'Azure has execution challenges and they literally need to build buildings a little faster.'
UBS analysts questioned the AI's computing power, pointing out that 'Copilot has not accelerated Microsoft 365 revenue growth, and multiple surveys show no signs of widespread adoption. The market is crowded and capital-intensive, and Microsoft needs to 'prove' these investments are effective.'
Microsoft 365 has announced a price increase in July 2026.
Microsoft 365 for businesses to implement biggest price hike since Copilot launch - GIGAZINE
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