Microsoft shares have fallen heavily as the software giant reported disappointing results that deepened investors’ fears about the artificial intelligence boom.
Shares in the company fell by more than 7pc in after-hours trading, wiping more than $200bn (£155bn) off the company’s value and sending its market capitalisation below $3 trillion.
Microsoft reported a 15pc increase in quarterly revenues to $64.7bn, while profits rose by 10pc to $22bn.
Despite the figures being better than forecast, investors took fright at lower-than-expected sales in its cloud computing division, which is seen as the company’s key growth driver.
Shareholders had been on edge after last week’s disappointing results from Google’s parent company Alphabet, a rival in the AI race.
The Seattle-based company has been at the forefront of AI thanks to a major investment in OpenAI, the US start-up behind ChatGPT, and is spending billions building the computing infrastructure it says will be needed to power the next generation of systems.
However, tech stocks have fallen in recent weeks amid fears about overspending and concerns that AI is failing to produce revenues that match the hype.
On Tuesday, shares in Nvidia, the microchip company that has been the poster child of the AI boom, fell by more than 6pc.
Microsoft’s figures triggered a wider sell-off in after-hours trading with Nvidia falling a further 2pc and British semiconductor company Arm falling 2.6pc.
The Nasdaq index, dominated by big tech companies, is currently trading at its lowest level for two months, although it has still risen by 16pc so far this year.
The so-called “magnificent seven” of Microsoft, Apple, Tesla, Alphabet, Meta, Amazon and Nvidia have lost $1.5 trillion in value between them in the last three weeks.
Meta is due to report quarterly figures on Wednesday, followed by Amazon and Apple on Thursday.
Microsoft’s figures came after the company had faced a widespread outage involving its services such as Outlook email and cloud hosting.
Cambridge Water and Starbucks were partially affected by the problem. Microsoft said it had largely resolved the issue.
The outage came less than two weeks after a flawed update in the security software CrowdStrike meant millions of Windows computers were able to boot up, in what was seen as the biggest IT outage in history.
