Key Highlights

● Microsoft slipped $11.87 to close at $521.08 on October 22.

● Microsoft reports earnings on Wednesday, October 28.

● The decline was modest compared with the chip stocks.

● Software stocks held up better than hardware overall.

Microsoft (NASDAQ:MSFT) slipped $11.87 to close at $521.08 on Thursday, October 22, 2026, weighing on the Dow Jones Industrial Average as the software and cloud giant moved with a broad selloff in artificial-intelligence stocks.

The move came without company-specific news. Instead, the stock fell as investors sold the biggest AI spenders, less than a week before Microsoft's own earnings on Wednesday, October 28.

Meta's report set the tone

The trigger came from a fellow technology giant. Meta Platforms (NASDAQ:META) reported late Wednesday that it had narrowed its 2026 capital-spending range to $135 billion to $145 billion. Its free cash flow turned negative at $2.12 billion, its first cash outflow in more than a decade, according to market data, and it disclosed about $825 billion in future spending commitments, up from about $700 billion in July, according to market data.

Those numbers raised uncomfortable questions for every company pouring money into AI data centers, Microsoft included. Through its Azure cloud platform and partnerships in AI, Microsoft is one of the largest buyers of AI chips and builders of data-center capacity.

Lam Research (NASDAQ:LRCX)'s outlook, which flagged supply constraints, and Nvidia (NASDAQ:NVDA)'s chief executive's remark that "the demand of the capital is much greater than the availability of the capital," added to the pressure.

A milder fall than the chip stocks

Microsoft's decline was modest compared with the damage elsewhere. The Philadelphia Semiconductor Index suffered its biggest one-day drop since June 23, and Nvidia, AMD (NASDAQ:AMD) and Marvell (NASDAQ:MRVL) all fell hard. Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) also slid more sharply than Microsoft.

The Nasdaq Composite fell 694.00 points, its steepest drop since June 5, ending a seven-session winning streak and erasing about $1 trillion in market value, according to market data. The S&P 500 lost 93.74 points to 7,663.43, its worst day since July.

Software held up better than hardware overall. Salesforce (NYSE:CRM), Adobe (NASDAQ:ADBE) and Intuit (NASDAQ:INTU) rose, and cybersecurity names gained, as part of a rebound in beaten-down software stocks. Microsoft, which straddles both software and AI infrastructure, ended up in between.

The Dow held its ground

The Dow Jones Industrial Average finished up 11.89 points at 52,867.98, essentially flat and at a one-month high, according to market data. Gains in Procter & Gamble (NYSE:PG), Home Depot (NYSE:HD), Johnson & Johnson (NYSE:JNJ) and Verizon (NYSE:VZ) offset losses in Nvidia, Amazon, Caterpillar (NYSE:CAT) and Microsoft.

Across the market, about two of every three S&P 500 stocks rose, according to market reports, as money moved into staples, health care, utilities and financials. Treasury yields fell sharply, with the 10-year yield closing back below a closely watched threshold for the first time since September 22.

Microsoft's Report Will Test the AI Spending Debate

Microsoft reports on Wednesday, October 28, alongside Alphabet and ServiceNow (NYSE:NOW), and on the same day as the Federal Reserve's policy decision. Investors will focus on Azure growth, the pace of AI-related revenue and, after Meta's report, any change to Microsoft's capital-spending plans and how it intends to pay for them. Amazon reports a day later, on October 29. Together those results will show whether Thursday's selloff was an overreaction or the start of a deeper reassessment of AI spending.