Shares in Microsoft have fallen sharply after investment spending came in higher than expected in its latest results, released just days after the DeepSeek market shock for tech stocks.
The company, which has received reprimands from shareholders previously over AI-related bills, had already let it be known it expected to spend $80bn this year ahead of its earnings report on Wednesday night.
That AI spending forecast came before Monday’s rout for AI-linked stocks that saw the leading AI chipmaker Nvidia suffer the worst one-day loss in history, with almost $600m erased from its market value.
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While it has since clawed back some of those losses, it has left investors pondering whether the levels of investment planned by big US tech as a whole is completely necessary.
It’s all a consequence of the emergence of DeepSeek – the Chinese-owned and developed chatbot currently sitting atop Apple’s app store free downloads.
It toppled ChatGPT to get there.
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DeepSeek’s claims to have created the assistant on a shoestring budget – when compared to the vast US investment to date – forced US tech investors to not only question the huge sums involved but also the lofty market values of exposed firms.
Ahead of Monday’s market reaction that saw constituents of the Nasdaq bleed a combined total above €1trn, there had been an 18-month stampede for AI-linked shares.
Microsoft was among those to benefit in that time and among those to face pressure on Monday.
The company, a major shareholder in privately owned OpenAI, lost $7bn in market value.
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Analysts said that Microsoft’s latest share price pain was related to slower-than-expected growth in its crucial Azure cloud business between October and December despite an increasing contribution from AI.
Capital expenditure came in $1.6bn higher than consensus forecasts.
Just hours earlier, the company announced that it had added DeepSeek’s model to its offerings on Azure.
Shares were up to 4% lower in after-hours trading despite both group revenue and profits beating estimates.
