Microsoft Short Interest Reaches Decade High Ahead of Q2 Earnings Amid AI Spending Concerns
Investor pessimism toward Microsoft has reached its highest level in over 10 years, with short interest hitting a decade high ahead of the company’s second-quarter earnings report. According to S3 Partners, about 92 million shares are sold short, representing 1.27% of the public float—the largest increase among Magnificent Seven stocks and not seen since May 2015. The bearish sentiment is driven by uncertainty over whether Microsoft's heavy AI investments will yield sufficient returns. The pressure on Microsoft intensified after Alphabet raised its capital expenditure forecast for 2026, signaling a broader trend of increased spending in the tech sector’s cloud and AI infrastructure. This has led to growing investor concerns about profitability amid rising costs for data centers and chips. Microsoft CEO Satya Nadella recently projected $190 billion in capex for the year, with over $25 billion tied to higher component prices due to surging demand for AI hardware. Microsoft’s stock is down more than 18% this year, underperforming the S&P 500 by nearly 25 percentage points. Analysts suggest that Alphabet's move increases the likelihood of similar behavior from Amazon and Microsoft, raising further questions about long-term returns on massive tech investments.
Topics: AI spending capital expenditures investor sentiment Microsoft short interest