Microsoft's AI Spending Under the Microscope as UK Weighs Strategic Status

Microsoft shares fell 2.1% on Friday to close at €470.75, caught in a sector-wide pullback that swept across technology and AI names on Wall Street. No company-specific news drove the decline; the stock simply moved with the broader tape and now sits below its 52-week high of €492.40.

The selloff had identifiable roots. According to AP, the vast majority of tech stocks in the S&P 500 finished lower as investors grew uneasy about the sheer scale of capital being poured into AI infrastructure while bond yields climbed. A parallel worry took hold: data-center operators, facing higher financing costs, may not generate revenue quickly enough to service their obligations. Reuters added that mounting concerns over intensifying Chinese competition further dampened sentiment.

UK Regulator Floats Special Status

Separately, the Competition and Markets Authority proposed assigning Microsoft strategic market status within its enterprise software ecosystem and launched a consultation ahead of any final decision. Such a designation could open the door to interventions targeting Microsoft's established product bundling. Reuters reported that the review focuses in particular on how applications like Teams and Excel are tied to the Copilot AI assistant, and also examines potential barriers to switching cloud providers, security solutions, and software licensing models. The CMA stressed that the proposal is preliminary and does not imply any wrongdoing, noting that Microsoft and Amazon Web Services could do more to lower existing hurdles for switching between cloud providers and for using multiple cloud services in the UK.

Analysts Lift Targets Ahead of Earnings

Despite the recent weakness, analysts remain bullish on the company's operating trajectory. StoneX analyst Yi Fu Lee raised his price target to $600 from $525 on Thursday and reiterated his buy rating. UBS analyst Karl Keirstead had moved first, lifting his target to $675 from $525 on Thursday while confirming a "Buy" rating. Investors get fresh data on October 28, when Microsoft reports first-quarter results for fiscal 2027 after the US market close. The stock is up 14% year to date.

Leadership Sounds Off on Visas and AI Rules

Away from the trading floor, management weighed in on longer-term policy questions. On Thursday, Microsoft President Brad Smith warned that possible US restrictions on Green Card access for skilled foreign workers could damage American technological competitiveness and push talent abroad. He also pushed back against Vice President JD Vance's allegations regarding Microsoft's use of the H-1B visa program. Earlier in the week, Smith called for international guardrails on artificial intelligence, advocating global safety rules that would include independent assessments of new technology and emergency controls for AI systems.

Homegrown Silicon and a CFO Share Sale

On the hardware front, Microsoft unveiled the Azure Maia 300 chip on Monday and confirmed that the Maia 200 is already in production. From 2027, the company plans multi-gigawatt deployments of the Maia family, which will serve as the primary platform for compute across its own products and services. In a separate disclosure, CFO Amy Hood sold 7,305 Microsoft shares under a pre-arranged trading plan in accordance with Rule 10b5-1. On the software maintenance side, Microsoft released routine security updates for Exchange Server; for customers on the second round of extended security updates for Exchange Server 2016 and Exchange Server 2019, October 2026 marks the final month for newly delivered security patches.