Microsoft shares faced selling pressure at the start of the week following news that the U.S. Federal Trade Commission (FTC) has launched an investigation. The probe centers on the technology giant’s cloud computing and artificial intelligence business operations. Regulators are examining whether the company’s licensing practices and its strategy of bundling AI services with its dominant productivity software suite are anti-competitive. This regulatory attention arrives at an inopportune moment for Microsoft, which is currently channeling billions of dollars into artificial intelligence development.
The Core of the FTC’s Inquiry
The antitrust agency is focusing on potential tactics Microsoft may be using to lock customers into its Azure cloud platform. Specifically, investigators are looking at the integration of cloud infrastructure with generative AI offerings, a cornerstone of the company’s growth strategy. This scrutiny comes as Microsoft is in a critical phase of attempting to generate returns on its massive AI investments.
The investigation adds to existing investor concerns. While Microsoft posted robust quarterly results at the end of January, including a 39 percent growth rate for its Azure segment, the report also revealed a significant jump in capital expenditures. Quarterly investment spending soared to $37.5 billion, driven largely by outlays for data centers and AI chips. These substantial costs had already sparked discussions on Wall Street regarding future profitability.
Should investors sell immediately? Or is it worth buying Microsoft?
Technical and Fundamental Headwinds
From a technical analysis perspective, Microsoft’s stock is undergoing a correction. The share price is trading well below key moving averages and has declined more than 20 percent since its 52-week high last November. The current mix of regulatory uncertainty and high capital expenditure is causing investors to adopt a cautious stance in the near term.
Despite the headwinds, the majority of market analysts maintain a positive long-term outlook, citing the company’s entrenched market position. However, short-term price action is likely to be influenced by uncertainty surrounding the FTC probe’s outcome. The key question for markets is whether the investigation will lead to concrete regulatory action or conclude without significant consequences.
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