Microsoft’s stock finds itself navigating turbulent waters as ambitious artificial intelligence goals collide with mounting investor apprehension. Trading hovered around the $423 level on Tuesday, February 3, 2026, reflecting market unease triggered by a report detailing friction between OpenAI and Nvidia, coupled with lingering doubts following the company’s latest earnings release.
Investor Focus Shifts to Soaring Capital Expenditures
Despite posting robust financial results for its second fiscal quarter on January 28, 2026, Microsoft’s shares shed approximately ten percent in the subsequent week. The market’s reaction overshadowed a strong operational performance. The company reported earnings per share of $4.14, surpassing the consensus estimate of $3.86. Revenue reached $81.27 billion, marking a 16.7% year-over-year increase.
The primary concern for investors centered on capital expenditures, which surged to $37.5 billion for the quarter—a 66% jump. These substantial funds are being channeled into a massive expansion of AI infrastructure. Concurrently, growth in Azure, the corporation’s cloud division, showed signs of deceleration, adding to the cautious sentiment.
Key Financial Metrics:
* Current Share Price: ~$423
* Q2 Earnings Per Share: $4.14
* Q2 Revenue: $81.27 billion
* Q2 Capital Expenditures: $37.5 billion (+66%)
Should investors sell immediately? Or is it worth buying Microsoft?
OpenAI Explores Hardware Alternatives, Highlighting Strategic Dependencies
Further pressure emerged from a Reuters report indicating that OpenAI, Microsoft’s cornerstone AI partner, is evaluating alternatives to Nvidia’s chips for inference tasks. The AI research company is reportedly testing other options due to dissatisfaction with current hardware efficiency.
Although Nvidia CEO Jensen Huang publicly countered the narrative, affirming “enormous” investments in OpenAI, the news underscores a critical vulnerability in Microsoft’s approach: its reliance on intricate infrastructure partnerships. This development comes as Microsoft recently finalized a $750 million Azure deal with AI search firm Perplexity and engages in joint negotiations with Nvidia and Amazon concerning additional multibillion-dollar investments in OpenAI.
Analyst Outlook Remains Positive Despite Near-Term Weakness
Even with the recent share price pressure, the consensus analyst rating for Microsoft stock continues to be “Moderate Buy.” The median price target stands at approximately $598, suggesting significant potential upside from current levels. In a separate announcement, Microsoft declared a quarterly dividend of $0.91 per share, payable on March 12.
The central challenge for Microsoft remains clear: Can the company successfully balance its aggressive AI investments—estimated to exceed $100 billion in 2026 alone—with stable margin growth and a re-acceleration of its Azure business? The answer to this question is likely to be the principal driver of the stock’s trajectory in the coming months.
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