Microsoft Accused of Misleading Investors on Cloud Growth, AI Spending in Shareholder Lawsuit — Update

By Kelly Cloonan

Microsoft has been accused in a shareholder lawsuit of defrauding and misleading investors about slowing growth in its Azure cloud unit and plans to spend heavily on artificial-intelligence infrastructure.

The proposed class action, which was filed in a federal district court in Seattle on Friday, alleged that Microsoft made false or misleading statements in several earnings reports, conference appearances and during its annual shareholder meeting. According to the lawsuit, the company cited its Azure cloud business as a key growth driver while downplaying concerns about its AI investments, in turn boosting its stock price to all-time highs.

The proposed class period runs from May 1, 2025 to ​January 28, 2026 when the company disclosed fiscal second-quarter results that sent its stock sliding. In that quarter, Microsoft logged 39% revenue growth for its Azure and other cloud businesses, down sequentially. The company also reported a jump in capital expenditures from the prior-year quarter.

The lawsuit accused the company of knowing, or recklessly disregarding, that the public documents and statements it issued during the period were materially false and misleading. The lawsuit was led by ⁠the City of St. Clair Shores Police and Fire Retirement System, a pension fund based in Michigan.

A Microsoft spokesperson said the company is aware of the complaint and believes the claims are without merit.

"Microsoft stands by the integrity of its public statements and will vigorously defend itself in court," the spokesperson said.

Write to Kelly Cloonan at kelly.cloonan@wsj.com

(END) Dow Jones Newswires

June 15, 2026 16:05 ET (20:05 GMT)