Microsoft Shares Drop 5% as Investors Weigh $190 Billion AI Spending Plans

Microsoft shares fell 5% to $402 following the Q3 earnings report released after market close on April 29, 2026. The results confirmed a beat on both revenue and earnings per share (EPS) expectations, with record revenue reaching $82.9 billion. Amidst the volatility, analyst Mark Moerdler raised the price target to $646, highlighting Azure's robust 40% revenue growth. While investors remain anxious over the $190 billion capital expenditure plan for AI, the segment's revenue surge of 123% provides a strong counter-argument. Notably, investors are increasingly pivoting toward ETFs as an alternative to direct stock investment to diversify risk against MSFT-specific volatility. Management expects profitability to scale by fiscal year 2026 as infrastructure investments yield returns despite competition from AMZN and GOOGL.