For the second time in 2026, Microsoft (NASDAQ: MSFT) recorded substantial stock market losses in the immediate aftermath of reporting strong quarterly earnings.
Specifically, after unveiling its results during the fiscal year (FY) 2026’s third quarter (Q3) late on April 29, the blue-chip technology giant saw its shares slide 3.93% during the April 30 session. Furthermore, the latest MSFT closing price of $407.78 ensured the company’s market capitalization found itself at $3.029 trillion for nearly a $124 billion one-day loss.
How the AI boom led to Microsoft erasing $124 billion in a day
Such performance is most likely linked to Microsoft following the trend of increasing capital expenditure (CapEx) to further the development of artificial intelligence (AI) technology and infrastructure, with the result of diminishing free cash flow almost uniformly triggering investor anxiety.
In the case of the company behind Windows, Q3 CapEx and finance leases amounted to $31.9 billion, while gross margins fell, at 67.6%, to their lowest percentage since 2022. Free cash flow margin likewise diminished compared to the same period one year earlier, dropping from 29% to 19.1%.
Notably, the 3.93% decrease in AI expenditure is in line with an overall trend in 2026, though the late April losses were significantly smaller than the previous $360 billion daily wipe that came after the revelation that as much as 45% of Microsoft’s backlog was tied to OpenAI.
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Elsewhere, it appears unlikely that MSFT stock’s latest drop will prove sticky, considering the firm’s other reported figures were overall strong. The blue-chip technology giant, for example, offered a double beat in terms of revenue and earnings per share (EPS).
Indeed, the firm’s EPS came in at $4.27 instead of the $4.06 expected, while sales amounted to $82.89 billion when $81.39 billion was forecasted.
Looking ahead, Q4 growth for Microsoft Azure – an increasingly important business division – is expected to amount to between 39% and 40% – better than the expected 37% – but the midpoint of the revenue guidance – which falls at $87.25 billion – might have also contributed to the latest correction as it is lower than the consensus forecast of $87.53 billion.
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