Microsoft shares plunged 22% as investors reacted to underwhelming performance in two of the company’s flagship segments, Copilot and Azure. The sharp drop reflects heightened concerns over growth prospects in AI-driven services and cloud infrastructure.

During the recent quarter, Copilot adoption failed to meet analyst forecasts, and Azure revenue growth decelerated, falling short of the high-teens targets investors expected. Management cited integration challenges and increased competition as key headwinds.

Following the earnings release, several brokerage firms lowered their price targets and earnings guidance for Microsoft. Analysts are watching for updated forecasts at the upcoming financial update and monitoring AI spending trends across enterprises.