Microsoft faces longest losing streak since 2011

Microsoft Corp. is approaching its longest stretch of daily losses in over a decade, as growing concerns about the AI market continue to impact major tech stocks.

This report follows the release of data on Friday, November 7, which highlighted a drastic drop in the software giant’s shares by as much as 0.8%. 

Following this decrease,  analysts cautioned that if the company closes the trading day lower, it will represent the longest decrease for Microsoft since a nine-day fall that ended in November 2011. During these eight days, the stock declined by 8.6%, resulting in a loss of approximately $350 billion in market value. 

Amid the stock pressure, Microsoft Corp. recently inked a deal worth about $9.7 billion to acquire artificial intelligence computing capacity from IREN Ltd., making the Australian company its largest customer.

The five-year agreement grants Microsoft access to Nvidia Corp.’s systems in Texas, which are built for AI workloads, and includes a 20% prepayment, IREN said in a statement on Monday. Sydney-based IREN has agreed to purchase the necessary advanced chips, known as graphics processing units, and related equipment for $5.8 billion from Dell Technologies Inc.

Microsoft has made several multibillion-dollar deals with data centre operators like IREN and CoreWeave Inc. over the past few months in an effort to secure as much computing capacity as possible to compete in the race to build and power AI systems. Just days ago, the Redmond, Washington-based firm said it’s still struggling to secure enough capacity to fulfil all of the demand for its cloud services.

Microsoft encounters significant challenges at this time due to AI weaknesses

Microsoft’s stock has declined since it revealed its quarterly earnings in late October. While the report includes a few positive strengths, such as growth in its Azure cloud computing business coming in better than analysts expected, Wall Street is increasingly concerned about the money companies invest in building AI infrastructure.

Sources noted that Microsoft’s investment move accounted for about $34.9 billion in capital expenditures in the quarter. Moreover, the company hinted that spending would rise again in its current fiscal quarter.

Regarding Microsoft’s decline in stock, analysts noted that this decline indicates a shift in sentiment towards AI companies, which had significantly enhanced the market earlier in the year. Meanwhile, both the Bloomberg Magnificent 7 Total Return Index and the Nasdaq 100 Index declined 4% this week, marking their largest percentage drop in a week since April.

Contrastingly, Apple Inc., which has not invested as heavily in AI, encountered an increase in its stock, rising by as much as 0.9% on Friday. Despite AI weaknesses, this achievement has positioned the tech company as a safe choice.

Apple remains unaffected in a recent large selloff

Reports dated November 6 this year noted that a recent large selloff affected several top-performing AI stocks such as Palantir Technologies Inc. and  Nvidia Corp. Interestingly, only Apple remained unaffected. While other tech firms encountered declines, the iPhone maker faced a slight increase. The Nasdaq 100 Index, on the other hand, decreased by 1.6%.

This situation was similar to an earlier trading period, when Apple experienced a slight increase despite the overall index declining by around 2.1%. In the meantime, it is worth noting that Apple’s stock has escalated, surpassing the 5% mark in the past month, while the tech-focused index barely changed, surging by less than 0.5%. 

Concerning Apple’s remarkable performance, analysts commented that this accomplishment marks a return to the firm’s usual stability. To achieve this stability, the tech firm has adopted a mechanism to generate cash and secure a strong financial position, which has enabled it to withstand market challenges.

However, Apple reportedly fell behind other companies for much of this year because investors shifted their focus towards AI profits.

Still, the tech giant revived after sharing a positive outlook earlier, which counteracted findings that demonstrated poor performance in China. According to recent reports, the iPhone maker earned approximately $27.5 billion in net income last quarter, with total revenue reaching $102.5 billion. 

Get up to $30,050 in trading rewards when you join Bybit today