(June 15): Microsoft is being sued by shareholders for deceiving them and inflating its stock price by failing to disclose slowing growth in its Azure cloud business and the need to spend billions of dollars on AI infrastructure.
A proposed class action lawsuit led by a Michigan pension fund was filed Friday in Seattle federal court after Microsoft’s stock fell 10% on Jan. 29 following the previous day’s quarterly earnings report.
About US$357 billion (RM1.4 trillion) in market capitalization was wiped out, with Microsoft shares posting their biggest one-day fall in nearly six years.
Microsoft did not immediately respond to a request for comment on Monday.
Microsoft reported a 39% increase in revenue from its Azure and other cloud businesses for the fiscal second quarter ending in December, in line with analyst expectations but down from 40% in the previous quarter and expected to grow between 37% and 38% in the first three months of 2026.
Microsoft also reported second-quarter capital spending of US$37.5 billion, an increase of nearly 66% year-over-year and higher than analysts’ expectations of US$34.3 billion.
According to the complaint, Microsoft blames Azure’s slower growth and increased spending on capacity constraints as it redirects resources to AI-related research and development and to rival Copilot chatbots such as Google’s Gemini and OpenAI’s ChatGPT.
Redmond, Washington-based Microsoft is a major investor in OpenAI.
The lawsuit is being led by the St. Clair Shores, Michigan Police and Fire Retirement System.
Defendants include Microsoft CEO Satya Nadella and Chief Financial Officer Amy Hood, among several others.
The proposed class period is from May 1, 2025 to January 28, 2026.
It’s common for shareholders to sue companies for securities fraud after stock prices unexpectedly decline.
Uploaded by Magessan Varatharaja
