Investing.com — Software shares fell sharply in premarket U.S. trading Thursday after updates from Microsoft and SAP raised fresh questions about the durability of cloud and AI spending.
Microsoft slid about 7% even after the company posted stronger-than-expected quarterly results.
The company reported adjusted earnings of $4.14 per share on revenue of $81.3 billion, both ahead of analyst forecasts.
But investors focused on slowing momentum in Azure, where revenue rose 39%, only marginally above expectations and slightly weaker than the prior quarter’s pace.
The deceleration added to concerns about whether hyperscale cloud growth can keep expanding at recent rates.
SAP has dropped roughly 16% after the enterprise software group’s latest update failed to ease market worries.
The company met expectations for fourth-quarter revenue, but its cloud backlog and its 2026 cloud revenue outlook fell short of forecasts. The miss puts pressure on a stock that has already declined significantly since peaking in mid-2025.
The broader software sector was dragged lower alongside the two industry leaders.
Datadog has declined about 5.5%, Atlassian has dropped 4.3%, Workday is down 3.9%, and Snowflake has lost around 4.3% in premarket action.
Salesforce is down roughly 4.6%, while MongoDB slipped 3.7% and Adobe declined nearly 2.6%.
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