On January 29, 2026, Microsoft experienced a significant post-earnings decline, causing ripples across the tech sector despite the Dow Jones Industrial Average remaining near record highs. The S&P 500 slipped 0.17% to close at 6,969.01, while the Nasdaq Composite fell 0.72% to end at 23,685.12, both reflecting a downturn driven by tech stocks.
In a day marked by volatility, mega-cap tech stocks dominated trading dynamics. Microsoft saw a drastic drop of 9.99%, closing at $433.50, resulting in a staggering $357 billion loss, which stands as the second-largest single-day decline for the company. Despite this, the broader index losses were somewhat mitigated by robust results from Meta Platforms, which posted a 10.71% increase.
The software sector also faced turbulence, highlighted by ServiceNow’s plunge of 9.94% to $116.73, even as it reported fourth-quarter earnings that exceeded analyst predictions. This selloff extended to other key players, with Salesforce and Adobe also experiencing declines amidst ongoing concerns that advancements in artificial intelligence (AI) could supersede their services.
Investors reacted sharply to Microsoft’s earnings report, which, while surpassing analyst projections, failed to meet expectations for its Azure cloud service, leading to apprehension over substantial spending related to AI. By the market’s close, however, both the S&P 500 and Nasdaq showed signs of recovery, remaining close to their previous highs. The Federal Reserve’s decision to maintain current interest rates provided some stability to the markets, while Meta’s positive earnings report balanced the impact of Microsoft’s downturn. Meta’s results not only surpassed expectations but also included optimistic forecasts for the upcoming quarter.
In contrast to Microsoft’s difficulties, Apple reported earnings after market close that exceeded expectations, buoyed by strong demand for its iPhone products.
As the market navigates this period of uncertainty, investors are analyzing the implications of significant AI-related costs and investor sentiment surrounding tech stocks. Financial commentary indicates a mixed outlook as stocks experience fluctuations while maintaining proximity to prior highs. Furthermore, there is an ongoing conversation about the long-term implications of AI technologies on established business models across the tech landscape.
Investment advisory firms have indicated their positions in various tech stocks, recommending a cautious approach while keeping an eye on developments related to AI and cloud services, which remain pivotal for future performance in the sector.
