Microsoft Faces Shareholder Lawsuit Over AI Spending
Microsoft Faces Shareholder Lawsuit Over AI Spending
Publish Date: 2026-06-15 18:13:00
Source Domain: www.pymnts.com
Microsoft shareholders sued the company Friday (June 12), alleging that it defrauded them and inflated its stock price by concealing slower growth in its Azure cloud business and a need to invest billions of dollars in artificial intelligence infrastructure, Reuters reported Monday (June 15).
The lawsuit was sparked by Microsoft shares falling 10% on Jan. 29, a day after the company said in a quarterly earnings report that the revenue growth of Azure and its other cloud businesses slowed from 40% the previous quarter to 39% and that its capital spending rose by nearly 66% year over year, according to the report.
Microsoft attributed those results to capacity constraints the company faced because it shifted resources to AI-related research and development and to its Copilot chatbot, per the report.
The lawsuit is led by the Michigan-based City of St. Clair Shores Police and Fire Retirement System, the report said.
Microsoft did not immediately reply to PYMNTS’ request for comment.
PYMNTS reported Jan. 28 that after the day’s earnings call, Microsoft’s share price fell mid-single digits in after-hours trading due to concerns around AI-driven capital expenditures.
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During the call, Microsoft executives suggested that the company’s latest transformation story revolves around AI.
“We are only at the beginning phases of AI diffusion and already Microsoft has built an AI business that is larger than some of our biggest franchises,” Satya Nadella, chairman and CEO of Microsoft, said during the call. “We are pushing the frontier across our entire AI stack to drive new value for our customers and partners.”
In response to investors’ questions about capital expenditures, executives said during the call that Microsoft aims to build the full AI stack and that it is not just renting GPUs, but is bundling model access, orchestration tools, security and governance into a single enterprise-ready environment.
In an earlier,…
