Microsoft stock sinks as AI spending ramps to $190 billion as Q3 earnings top forecasts

Microsoft beat Q3 estimates but its stock fell as investors reacted to a much larger AI-driven capex ramp. Q3 EPS was $4.27 on revenue of $82.89 billion, topping Street forecasts, and the company said its AI business now runs at a $37 billion annual revenue run rate (up 123% YoY). Management warned of heavy investment: $31.9 billion spent in Q3, Q4 capex of about $40 billion, and calendar 2026 capex rising to $190 billion (vs prior ~$150B). Shares dropped as much as 5% on the outlook. Microsoft also reported $627 billion in remaining performance obligations and Copilot surpassing 20 million paid seats, underscoring continued demand but near-term margin and cash-intensity concerns.