The number that anchors the case is a single day. On 29 January, Microsoft shares fell about 10%, the company’s steepest one-day drop in nearly six years, wiping out roughly $357bn in market value after a quarterly earnings report the previous evening.
A securities class action filed on 12 June in Seattle federal court argues that the fall was not a surprise so much as a reckoning, and that Microsoft had spent months keeping investors from seeing it coming.
The suit was brought in the US District Court for the Western District of Washington by the City of St. Clair Shores Police and Fire Retirement System, a Michigan pension fund, on behalf of shareholders who held the stock between 1 May 2025 and 28 January 2026.
It names Microsoft alongside several executives, including chief executive Satya Nadella and chief financial officer Amy Hood. The plaintiffs accuse the company of defrauding them and inflating the share price by failing to disclose two linked problems: that growth in its Azure cloud business was slowing, and that it would have to spend heavily on AI infrastructure to keep up.
The financial detail is where the complaint lives. Microsoft reported $37.5bn of capital spending in the quarter, up nearly 66% from a year earlier and above the $34.3bn analysts had projected. Azure revenue grew 39%, a strong figure in isolation but a deceleration from 40% the previous quarter, and management guided to 37% or 38% for the early months of 2026.
