Microsoft (MSFT) stock dipped approximately 1.7% in after-hours trading on February 26, 2026

 Microsoft (MSFT) stock dipped approximately 1.7% in after-hours trading on February 26, 2026, falling to around $394.80. This decline is part of a broader technology sector sell-off triggered by Nvidia's latest earnings report, which, despite beating analyst estimates, failed to satisfy sky-high investor expectations for the artificial intelligence (AI) trade.

Why MSFT is Dipping After Hours

The current downward movement is primarily driven by "AI disruption jitters" and sector-wide sympathy following Nvidia's results. Key factors include: 

• Nvidia Earnings Fallout: As a primary bellwether for the AI industry, Nvidia's 5.5% drop on Thursday weighed heavily on other "Magnificent Seven" stocks, including Microsoft.
• Concerns Over AI Capital Expenditures: Investors remain anxious about the sustainability of massive infrastructure spending. Microsoft's capital expenditures reached $37.5 billion in its most recent fiscal quarter, a 66% year-over-year increase, raising questions about the timeline for profitable returns.
• Slowing Cloud Growth: While Azure grew 38% recently, this marked a slight slowdown from previous quarters, leading to a "valuation reset" as the market shifts focus from AI hype to concrete revenue acceleration.
• OpenAI Concentration Risk: Disclosure that OpenAI accounts for 45% of Microsoft’s $625 billion commercial backlog has introduced perceived risk regarding reliance on a single major customer. 

Key Financial Metrics (Q2 Fiscal 2026)

Despite the stock's recent volatility, Microsoft's underlying financial performance has remained strong: 

• Revenue: $81.3 billion (up 17% year-over-year).
• Earnings Per Share (EPS): $4.14 (surpassing the $3.93 forecast).
• Cloud Revenue: Surpassed $50 billion for the first time in a single quarter.
• Shareholder Returns: Distributed $12.7 billion through dividends and buybacks during the quarter.