Microsoft Falls 12% As AI Spending Concerns Pressure S&P 500

Microsoft MSFT has turned into the biggest weight dragging against the S&P 500’s 2026 rally. The index is still up 8.3% and is trying to deliver a fourth straight year of double-digit percentage gains, a streak it has not achieved since the 1990s, but Microsoft’s 12% decline has become a major pressure point. Bloomberg data shows the software giant has been a far larger drag than Meta Platforms META or Tesla TSLA, even as investors also contend with inflation risks and the war in Iran. Microsoft shares rose slightly Thursday after The Information reported that Anthropic is in early talks to rent servers powered by Microsoft-designed AI chips.

The concern is not that Microsoft is missing the AI race. The concern is that the company’s AI reset could take longer, cost more, and deliver lumpier results than investors hoped. Its late-April earnings report pointed to underwhelming Azure cloud growth, especially against Alphabet GOOG and Amazon.com AMZN, which are both posting double-digit…