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Microsoft has been sued by shareholders who accused the company of defrauding them and inflating its stock price by failing to disclose slowing growth in its Azure cloud business and the need to spend billions of dollars on AI infrastructure.
The proposed class action led by a Michigan pension fund was filed in Seattle federal court on Friday, after Microsoft shares fell 10 per cent on January 29 in response to its quarterly earnings report a day earlier.
About $357 billion of market value was erased, and Microsoft’s stock suffered its biggest one-day decline in nearly six years.
Microsoft did not immediately respond yesterday to requests for comment.
The lawsuit, led by the City of St Clair Shores Police and Fire Retirement System in Michigan, said Microsoft attributed the slowing Azure growth and higher spending to capacity constraints as it diverted resources to AI-related research and development and to its Copilot chatbot, whose rivals include Google’s Gemini and OpenAI’s ChatGPT.
Microsoft, based in Redmond, Washington, is a major investor in OpenAI.
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