Microsoft’s stock price dropped 11% last week, the biggest one-day decline since March 2020, despite strong Q2 results with revenue up 17% to $81.3 billion and earnings per share up 60% to $5.16. Investors focused on increased spending and cloud revenue growth, which matched but did not exceed expectations.

Investor expectations for AI investments are high, evidenced by the stock market’s focus on revenue and profit growth. Microsoft’s results reflected disappointment in the pace of growth in capital expenditures and cloud revenue. In contrast, Meta Platforms saw a surge in its stock price after raising sales guidance for the current quarter.

AI-related companies like Microsoft and Meta Platforms must meet or exceed expectations to maintain share price growth in the competitive market. The stock market’s focus on AI investments underscores the importance of meeting revenue and profit targets for these companies.

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Read more at Nasdaq: Microsoft Is Tanking. What’s Behind the Decline?