Lawsuit alleges Microsoft misled investors by hiding Azure growth deceleration and $37.5B capital expenditure surge for AI infrastructure.
Microsoft faces a class-action lawsuit from shareholders alleging the company concealed slowing growth in its Azure cloud business and escalating AI-related spending. The suit, filed in Seattle federal court, follows a 10% stock drop on January 29, erasing $357 billion in market value—the largest single-day decline in nearly six years.
In its December quarter, Microsoft reported 39% Azure revenue growth, down from 40% the prior quarter, while projecting 37%-38% growth for early 2026. Capital expenditures surged 66% year-over-year to $37.5 billion, exceeding analyst estimates of $34.3 billion. The lawsuit claims Microsoft attributed these trends to AI capacity constraints and Copilot development.
The complaint, led by a Michigan pension fund, argues the company failed to disclose these pressures, artificially inflating its stock price. Microsoft has not commented on the allegations.