MSFT Stock Today: January 31 $357B Rout on AI Capex, Azure Growth Jitters
Microsoft stock fell more than 10% today, erasing about US$357 billion in market value after results signalled slower Azure cloud growth and heavier AI capital spending. The slide hit Big Tech broadly as MSFT logged its sharpest drop since 2020. Shares last traded at US$481.63, near the 50-day average of US$479.20 and below the 200-day at US$485.50. For Australian investors, the key is whether AI spend converts to revenue and margin support through Copilot and Azure over 2026. We outline valuation, cash flows, trading levels, and AUD-specific portfolio steps.
Why the sell-off matters for Australian investors
Management flagged slower Azure cloud growth while boosting AI infrastructure outlays. That raised concern on near-term margins. On trailing figures, capex equals about 27% of revenue and 52% of operating cash flow, underscoring the scale of the build. The market now wants a clear timeline for capex normalisation and stronger monetisation from Copilot and Azure AI services before expanding the multiple again.
A single-day value loss of US$357 billion tightened risk appetite across megacaps and cloud peers. The move dragged broader indices lower, with Microsoft stock leading declines, as reported by CNBC and Yahoo Finance. For Australian investors, this can flow through US-heavy ETFs and local tech sentiment, lifting volatility around ASX open and currency moves.
Valuation, cash flows, and margin stabilisers
At US$481.63, Microsoft stock trades near 26.7x TTM earnings and 10.4x sales, with a 0.79% dividend yield. Profitability remains strong, with a 39.0% net margin and 33.6% ROE. Free cash flow yield sits near 2.43%, reflecting high reinvestment. Street views remain supportive: 56 Buys, 2 Holds, and 1 Sell signal confidence in long-term economics despite near-term capex intensity.
We will watch whether capex growth slows as key data centres complete and AI utilisation rises. Better Copilot attach rates, Azure AI consumption, and enterprise renewals can support gross margin mix. Operating cash flow coverage of capex looks robust, but investors need updates on spend pacing and revenue conversion. Clear guidance on AI returns could reset sentiment and narrow the valuation risk premium.
Trading setup and key levels to watch
The tape is mixed. RSI is 45.3, ADX is 18.2, and MACD histogram is slightly positive, all pointing to a weak trend. Price sits below the 200-day average of US$485.50 and near the Bollinger middle band at US$481.51. Immediate levels: lower band US$471.42 as support and upper band US$491.59 as resistance. ATR of 7.92 suggests wider daily swings.
Next earnings is scheduled for 28 April 2026 (UTC). Into that print, we will track Azure growth commentary, Copilot revenue traction, and any capex timeline updates. Macro factors such as US yields and enterprise IT budgets could sway multiples. For Australian holders, currency moves around US data releases can add noise to returns, especially in unhedged exposure.
Portfolio moves for Australians
Investors can own Microsoft stock directly in USD or gain exposure via US-focused ETFs on the ASX, with both hedged and unhedged options available. Direct ownership gives precise sizing and voting, while ETFs offer diversification and simpler admin. Check each product’s fee, currency policy, and top holdings to understand how a single-day megacap move impacts portfolio risk.
Consider staged entries around identified support and resistance rather than all at once. Position sizing of 2% to 4% can help manage single-name risk. Review stop-loss or mental exit plans near the lower band if momentum weakens. Decide on currency hedging upfront, since AUD/USD swings can amplify or offset moves in Microsoft stock over short windows.
Final Thoughts
Microsoft stock just delivered a sharp reset as investors questioned slower Azure growth against heavier AI capital spending. The long-term case still rests on durable cloud demand, strong margins, and monetising AI through Copilot and Azure services. For now, we think the market needs clearer signals: steadier Azure growth, a path to capex moderation, and evidence that AI users spend more over time. Traders can monitor US$471 to US$492 as a near-term range, with the 200-day average near US$485.5 as a pivot. Australian investors should decide on hedged versus unhedged exposure, size positions modestly, and consider staggered buys. With the next earnings on 28 April 2026 (UTC), updated guidance on spend and AI revenue will be critical to rebuilding confidence. Always align decisions with your risk tolerance and time horizon.
FAQs
Why did Microsoft stock drop over 10% today?
Results showed slower Azure cloud growth alongside heavier AI capital spending. That raised near-term margin concerns and pushed investors to question the timing of returns from AI infrastructure. The outcome was a broad multiple compression across megacap tech, with Microsoft stock leading declines as risk appetite cooled.
Is Microsoft stock still attractive after the sell-off?
Valuation has eased to about 26.7x TTM earnings. Profitability remains strong with a 39% net margin and 33.6% ROE. The long-term thesis needs clearer monetisation from Copilot and Azure AI. If management shows capex moderation and stable growth, the risk-reward can improve for patient investors.
How can Australians gain exposure to Microsoft?
Invest directly in USD via a broker or use US-focused ETFs listed on the ASX. Many offer hedged and unhedged options. Direct shares give precise sizing; ETFs provide diversification. Consider fees, currency policy, and how much weight the fund holds in Microsoft stock before choosing an approach.
What technical levels matter this week?
Watch the Bollinger lower band near US$471 as first support and the upper band around US$492 as resistance. The 200-day average sits near US$485.5 and acts as a pivot. RSI around 45 signals neutral momentum. A sustained close above the upper band would improve the short-term tone.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
