Microsoft Drops 12% Amid AI Spending Worries, S&P 500 Slips

Microsoft declined 12% amid growing investor concerns that companies may be pulling back on artificial intelligence spending, weighing heavily on the S&P 500. The sell-off reflects a broader repricing of AI-related growth expectations, with Microsoft’s cloud and AI investments being a key component of its recent valuation premium. This shift in sentiment has pressured large-cap tech stocks, particularly those with high exposure to enterprise software and cloud infrastructure, amplifying their sensitivity to changes in corporate capital expenditure forecasts. The rate-sensitive S&P 500 is now facing headwinds from both elevated bond yields and potential softness in tech sector earnings. Traders will focus on upcoming enterprise cloud spending guidance from Amazon Web Services and Alphabet’s Google Cloud as a near-term catalyst for sector direction.

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