Microsoft and its peers increasing expenditures will lead today's leading technology companies to have more physical infrastructure than ever before, incur higher costs, reduce free cash flow, and issue more debt. Aaron Clark, a fund manager at GW&K Investment Management, said that higher spending levels have led investors to doubt whether large-cap tech stocks can still command high valuations as they did when their business models were more asset-light.

"The market is struggling with whether these investments are worth it," Clark said. "Is this a permanent shift to a higher gear of spending, or is it a land-grab phase where free cash flow will eventually return to previous levels?" He noted that free cash flow for companies like Amazon and Meta could turn negative in 2026.

Since releasing its earnings report on January 28, Microsoft's stock price has fallen nearly 14%, indicating investor dissatisfaction with Azure's revenue growth rate relative to the company's level of capital expenditure.