Microsoft Shares Drop 5.5% as AI Capex Forecast Hits $190B

Microsoft's stock has slid about 5.5% after earnings, driven by investor fears over a sharply raised 2026 capital expenditure forecast of roughly $190 billion, well above the $150-160 billion consensus. Strong results like 39% Azure growth and over 20 million Copilot paid seats were overshadowed by a 22% drop in free cash flow to $20.3 billion and doubts about AI investment returns compared to Alphabet's faster 63% cloud growth. Markets remain cautious, questioning near-term profitability amid ongoing capacity constraints.