Software King of the World, Microsoft saw its value tank yesterday as investors took one look at the cost of its artificial intelligence infrastructure and decided the party had got too expensive.
Volish stock fell 10 per cent, its biggest one-day drop since March 2020, wiping $357 billion off its market value in what was billed as its largest single-day drop on record and the second biggest one-day market cap fall for any US. company.
The Nasdaq composite sank as much as 2.6 per cent before clawing back to end down 0.7 per cent, while the S&P 500 slipped 0.1 per cent and the Dow finished up 0.1 per cent.
Tech has had a rough start to the year, and Thursday showed how much the broader market relies on a handful of giants to keep sentiment upbeat. The index damage was softened by basic materials, energy, and industrials, which is another way of saying investors looked for anything that does not require a new data centre every five minutes.
Late Wednesday, Microsoft flagged higher-than-expected spending on AI infrastructure and slower cloud growth, and the software crowd got punished for it. Meta Platforms dodged the bullet after its own results, with investors rewarding it for turning AI into stronger revenue growth by boosting advertising performance and engagement, sending its shares up 10 per cent.
The software sell-off was especially vicious, showing how quickly the cocaine nose jobs of Wall Street have sobered up since the arrival of “vibe coding”, where AI tools are used to churn out apps and websites at speed. ServiceNow fell 9.9 per cent as its acquisition habit raised doubts about whether organic growth is fading, while Salesforce dropped 6.1 per cent and is tracking for its worst month since the 2008-09 financial crisis.
Intuit, SAP, Atlassian and Datadog all slid at least six per cent, because nothing says confidence like everyone sprinting for the exit together. Bitcoin fell 5.5 per cent to $84,090, extending a month-long retreat that has started to look less like profit-taking and more like gravity.
