Microsoft shares drop while Tesla doubles AI spending

Key Takeaways

• Microsoft's stock dropped nearly 10% on January 29, 2026, due to concerns over $37.5 billion in AI capital expenditures and slowing Azure cloud growth (27%).
• Meta Platforms' stock gained 10% on January 29, 2026, after AI-powered ad targeting boosted Q4 revenue by 24%, with plans to increase AI expenses by 43% to $169 billion this year.
• CoreWeave, an AI stock, rebounded strongly in early 2026 after a late 2025 dip, supported by a $2 billion Nvidia investment and a commitment to buy capacity until 2032.
• Nvidia holds a 7% stake in CoreWeave and is helping fund its plan to build 5 gigawatts of AI factories by 2030.
• Tesla plans to double its AI spending to over $20 billion this year.
• Amazon is using AI to boost efficiency and may cut 30,000 white-collar jobs, with CEO Andy Jassy linking AI to workforce reduction.
• Micron Technology reported a 57% jump in fiscal first-quarter revenue to $13.6 billion, benefiting from generative AI-driven memory demand.
• IBM's software revenue grew 11% to nearly $30 billion in fiscal 2025, with generative AI bookings exceeding $12.5 billion.
• Elon Musk is considering merging SpaceX with his AI venture, xAI, for a mid-June public offering, aiming to be the first to bring a major AI startup to public investors.
• The AI industry super PAC, "Leading the Future," raised $125 million in 2025 to influence AI legislation and prevent over-regulation.

CoreWeave AI Stock Rebounds After 2025 Dip

CoreWeave, an AI stock, rose over 300% after its March IPO but then dipped in late 2025 due to debt concerns. However, it roared back higher in early 2026. The company provides crucial capacity for AI workloads using Nvidia GPUs and serves major tech clients like Meta Platforms. Nvidia has a strong relationship with CoreWeave, investing $2 billion and committing to buy capacity until 2032. This investment supports CoreWeave's plan to build 5 gigawatts of AI factories by 2030.

CoreWeave AI Stock Shows Strong Rebound in 2026

CoreWeave, an AI stock, saw its value increase over 300% after its IPO. Despite a dip in late 2025 due to investor concerns about debt and AI spending, the stock has strongly recovered in early 2026. CoreWeave provides essential AI workload capacity using Nvidia's powerful GPUs, serving major tech companies like Meta Platforms. Nvidia supports CoreWeave by holding a 7% stake and recently investing $2 billion to help build 5 gigawatts of AI factories by 2030. Nvidia also committed to buying CoreWeave's leftover capacity through April 2032.

US Stocks Fall as AI Spending Concerns Hit Tech Shares

US stocks, especially technology shares, slipped on January 29, 2026, as traders considered the impact of billions in AI spending. Microsoft's shares fell after the company reported record capital expenditures of $37.5 billion in its fiscal second quarter, a 66% increase, and slower cloud sales growth. This fueled worries that Microsoft's AI investments might take longer to pay off. In contrast, Meta Platforms Inc. saw its stock gain 10% on Thursday after reporting stronger-than-expected earnings.

Microsoft Leads Tech Stock Drop Amid AI Spending Worries

US tech stocks fell on January 29, 2026, with Microsoft shares dropping nearly 10% to $4433.50. This decline happened despite Microsoft beating earnings estimates and reporting over $50 billion in cloud revenue, including $32.9 billion from Intelligent Cloud. Investors worried about the company's AI spending and a slight slowdown in cloud growth. CEO Satya Nadella noted Microsoft has built a large AI business in the early stages of AI development. Microsoft, along with Meta, continues to invest billions in data centers for AI.

Microsoft Falls 10% While Meta Rises on AI Earnings

On January 29, Microsoft's stock dropped 10%, losing over $350 billion in value, as its cloud business growth did not meet investor expectations for AI payoffs. Azure's growth was slightly above forecasts, but Microsoft faces concerns about its OpenAI ties, which account for 45% of its cloud backlog. In contrast, Meta Platforms gained 10% after its AI-powered ad targeting boosted revenue by 24% in the December quarter and led to a positive first-quarter forecast. Meta plans to increase its total expenses by 43% to $169 billion this year for AI development. Tesla also announced plans to double its AI spending to over $20 billion this year.

Consider Micron and Amazon for AI Investing Beyond Nvidia

While Nvidia has seen massive growth in AI, investors might consider other promising AI-related stocks like Micron Technology and Amazon. Micron, a memory giant, is benefiting from the generative AI boom, which has caused memory demand to outpace supply and driven up prices. The company reported a 57% jump in fiscal first-quarter revenue to $13.6 billion. Amazon, a major e-commerce and cloud company, is using AI internally to boost efficiency and may cut 30,000 white-collar jobs this year, as CEO Andy Jassy linked AI to workforce reduction.

Elon Musk May Merge SpaceX and xAI for IPO

Elon Musk is considering merging his rocket company, SpaceX, with his AI venture, xAI, before a planned public offering later this year. SpaceX aims for a mid-June public debut, and including xAI would allow Musk to be the first to bring a major AI startup to public investors. This move also stems from Musk's ongoing rivalry with OpenAI CEO Sam Altman, whom he is suing for $134 billion. New legal entities in Nevada, listing SpaceX CFO Bret Johnsen, suggest preparations for a merger are underway.

AI Super PAC Raises $125 Million to Influence Laws

The AI industry super PAC, "Leading the Future," raised $125 million in 2025 and started 2026 with $70 million cash. This PAC receives support from major figures like Andreessen Horowitz, OpenAI co-founder Greg Brockman, and Palantir co-founder Joe Lonsdale. Its goal is to influence AI laws and prevent a mix of regulations that could slow down technology development. The PAC has already spent money in New York and Texas congressional races, opposing figures like Rep. Jamaal Bowman and Rep. Alexandria Ocasio-Cortez.

Software Stocks Fall as Microsoft Azure Growth Slows

Software stocks dropped sharply after Microsoft reported its quarterly results, showing a slowdown in Azure cloud computing revenue growth. Azure's growth rate fell to 27% in the fourth quarter from 31% in the previous quarter, causing investor concern. This slight deceleration, combined with a cautious future outlook, created uncertainty across the software sector. Investors are worried about how AI will reshape the industry, potentially disrupting current business models. The market now watches upcoming earnings from companies like Salesforce, Oracle, and Adobe closely.

Broadcom Shows Strong AI Growth But Valuation Concerns Remain

Broadcom reported strong financial results for its fourth quarter and fiscal year 2025, with revenue increasing by 28% and free cash flow by 39%. The company also boasts a significant $73 billion backlog related to AI and growing bookings. However, its high valuation, trading at 70 times earnings and 60 times free cash flow, raises concerns about its long-term growth. Management provides only quarterly guidance, indicating uncertainty about sustained growth. An analyst maintains a "Hold" rating due to the high valuation and potential risks from AI spending cycles.

IBM Software and Mainframe Sales Soar with AI Focus

IBM reported its best annual revenue for zSystems units in two decades and record software growth for fiscal year 2025. Software revenue increased 11% to nearly $30 billion, making up almost 45% of the company's business. CEO Arvind Krishna highlighted IBM's focus as a "software-led, hybrid cloud and AI platform company." The company's generative AI bookings exceeded $12.5 billion last year, with consulting making up most of that. IBM's infrastructure division also saw a 21% revenue increase in Q4, driven by AI-capable zSystems.

UMC Explores New AI Growth Paths

United Microelectronics, also known as UMC, is the world's fourth-largest contract chip manufacturer. The company creates integrated circuits for various customers, especially those without their own factories in the US and Asia. UMC handles the significant costs of running chip factories in a market that often goes through cycles of high demand and then oversupply. The company is looking into new ways to grow in the AI sector through advanced packaging and silicon photonics products.

Sources

• The Artificial Intelligence (AI) Stock That Refuses to Stay Down
• The Artificial Intelligence (AI) Stock That Refuses to Stay Down
• US Stocks Slip as Traders Weigh Billions in AI Spending Plans
• US tech stocks fall as traders assess AI spending plans
• Microsoft Plunges, Meta Rallies As Investors Demand AI Payoffs
• Should You Forget Nvidia and Buy These 2 Millionaire-Maker AI Stocks Instead?
• Elon Musk Considers Merging SpaceX With xAI, as He Races to Beat Sam Altman to IPO
• AI industry super PAC raises $125 million in 2025
• Why software stocks are getting crushed as AI casts 'shadow of uncertainty' over sector
• Broadcom's AI Success Is Undeniable - The Investment Case Is Not
• IBM enjoys a mainframe sales boost as its software segment soars
• UMC Unlocks New Avenue of Growth in AI via Advanced Packaging and Silicon Photonics Products