Microsoft Drops Most Since 2020

Summary

Mandeep Singh, Global Head of Tech Research at Bloomberg Intelligence, discusses Microsoft's roughly 10% post-earnings drop, driven by Azure growth of 38% versus buy-side hopes of 40%, capex of $37.5 billion, and sympathy with a beaten-down software/SaaS sector. He argues the selloff is an overreaction because Microsoft remains diversified, its OpenAI contract runs through 2031, and the print was not fundamentally broken. The segment also contrasts Microsoft with Meta's higher capex but raised revenue guidance and Google's vertically integrated AI stack, while flagging memory-cost pressure on Windows and potentially Apple.

• Microsoft fell sharply after Azure growth came in at 38% and capex rose 66% year over year to $37.5 billion.
• Mandeep Singh called the drop an overreaction and linked it to sympathy with weak software/SaaS names.
• He noted GPU capacity was diverted to in-house applications, weighing on Azure growth.
• Meta was seen as a green light for higher capex because it raised top-line guidance.
• Google was described as better positioned through vertical integration in chips, models, and applications.
• Rising memory prices are pressuring Windows and legacy server sales, with Apple a potential next focus.
• Competition from OpenAI and Anthropic and the payoff from Microsoft's AI spending remain key debates.