Shareholders filed a proposed class-action lawsuit against Microsoft, alleging the company concealed slowing growth in its Azure cloud business and the scale of capital spending needed for AI infrastructure, Reuters reports. The complaint was filed in Seattle federal court by the City of St. Clair Shores Police and Fire Retirement System and names CEO Satya Nadella and CFO Amy Hood as defendants, per Reuters and PYMNTS. The proposed class period runs from May 1, 2025 to January 28, 2026, Reuters says. The filing follows a sharp market reaction after Microsoft issued fiscal second-quarter results in late January, when shares fell 10% and about $357 billion of market value was erased, Reuters reports. For the quarter, Microsoft reported 39% revenue growth in Azure and other cloud businesses, down from 40%, and disclosed $37.5 billion of capital spending, up nearly 66% year over year and above analysts’ $34.3 billion projection. The complaint alleges those results were masked by statements attributing slower growth and higher spending to capacity constraints as resources shifted to AI-related R&D and Copilot, per Reuters. Microsoft said the claims are “without merit” and will vigorously defend itself in court, Reuters adds.
