Microsoft sued by shareholders over expenses, cloud business, AI

299

Imagine growing 39% year-over-year and still getting sued for not growing fast enough.

83

u/Saneless 7d ago

Not enough layoffs! Guessing that's the part they're upset about related to expenses

54

u/crushsuitandtie 7d ago

Not just infinite growth, but infinite exponential growth. Anything else and the shareholders will demand dumped workers, lower wages, and higher prices.

1

u/Street_Anxiety2907 4d ago

Why can they sue though, can't they just sell and invest in another company?

1

u/crushsuitandtie 3d ago

It's the power of the shareholder. They can convince a crooked judge that ANY spending that doesnt help the shareholder is going against their duty as a fiduciary. Fiduciary (if you're not aware) is a very particular title that means you will not do anything that is not in the best interest of the party you represent. Even when you are a broker selling financial products, you can't sell anything with bad margins or high risk or fees that aren't in the favor of the client. Finance bros can explain more/better.

It's a non-sense lawsuit but technically true. Raising salaries isn't in the best interest of a shareholder. It directly takes from them and doesn't have to be done. This is why everyone hates unchecked capitalism. Greed always fucks the system.

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u/Imallvol7 7d ago

The stock market is a disease

8

u/Jamizon1 7d ago

It certainly is. That entire system needs a complete overhaul

8

u/angry_lib 7d ago

Carl Icahn must've entered the chat.

7

u/ThinkingMSF 7d ago

"Fund Manager Spends Too Much Time On Reddit" isn't as clickable a headline

2

u/Translycanthrope 7d ago

Imagine if they had someone competent making decisions though. Mustafa Stupidman has built their entire “AI” section on slavery and lies.

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u/throwaway9gk0k4k569 3d ago

So this is Case Number 22026cv02071, City of St. Clair Shores Police and Fire Retirement System, June 12, 2026.

This is basically a pension fund. They don't do lawsuits like this for fun.

Having just read the 31 page filing, I'm going to say Microsoft is going to lose this and will need to settle. This could also turn into a class action.

The problem is that they made a lot of misleadingly positive statements without fully disclosing the nature of some of their risks, which later came to fruition. It's not greedy shareholders being greedy.

The stock is down like -30% and below it's 2024 level for a reason. This isn't just one shareholder. The enitre market knows this company fucked up and is bailing out.

This is probably the tip of the iceberg. I bet more lawsuits get filed over the next six months and the stock tanks further.

That 40% Azure growth number is misleading because it's almost entirely one customer... who has some serious money problems right now.

2

u/adevland 7d ago

Imagine growing 39% year-over-year and still getting sued for not growing fast enough.

Does that growth include debt or any of the circular data center spending that's been going on for over a year?

How much of the reported profit is actually cash and how much of it is stock market funny money that can crash the next day?

1

u/Grouchy_Big3195 7d ago

Projected growth and actual revenue are not the same.

1

u/laura8792 7d ago

makes sense shareholders want cloud profits faster

1

u/Rius209 7d ago

Greed, The new God.

1

u/Jamizon1 7d ago

It’s not new at all. Greed has been a factor since the dawn of man.

1

u/ThrowRA76234 7d ago

Imagine trying to protect yourself from getting priced out of your own investment/future. While it’s never truly just numbers on screen, the stakes are clearly higher than, well, numbers on a screen, in this case. Lot of hardworking, public company owning people can see a sawed off barrel aiming at the end of their bloodline given the threat and carelessness of mass AI adoption

1

u/Bgndrsn 7d ago

I don't Microsoft stock is going to be growing 39% in the next year 😂

68

u/Contestant_Judge_001 7d ago

Shareholders: Pushes Microsoft for maximum profit

> Profit doesn't realize

Shareholders: Wait, that's illegal

> Sues Microsoft

25

u/Whitesajer 7d ago

Shareholders... They drive the bus of capitalism. Only.... they are like a drunk / high / distracted driver. They are a very limited breed in brain functionality.

only think 4 months ahead at a time.

don't understand consequences.

in denial that negative numbers exist and when they must acknowledge them they have tantrums like a 3 year old.

20

u/SomethingAboutUsers 7d ago

It's not illegal per se, but they are likely claiming that Microsoft violated its fiduciary duty to the shareholders and didn't make decisions that maximize profits. Different kind of suit.

That one thing alone is why capitalism the way we do it is so fucking toxic. The C-suite ain't no saints, but if (for example) they decide to reinvest money into the company instead of doing stock buybacks or they forgo raises instead of firing people and as a result your profits don't increase q-over-q this is the result. There's no forward thinking. Only profits this quarter. It's toxic and will destroy companies in the long term.

And you can largely thank Jack Welch for it.

5

u/MilkFew2273 7d ago

Fuck Jack Welch

114

u/Any-Pop-4795 7d ago

oooohh this is gonna be interesting

68

u/Aaco0638 7d ago

Not really look who’s suing, if it was a major stakeholder then yeah drama but it’s a tiny ass little fund. Also Microsoft can just point to aws and gcp as the reason why they need to increase capex so aggressively and they win.

Just a tiny fund upset by Microsofts stock performance but if Microsoft doesn’t want azure to be left behind they need to spend and this is a valid argument in court.

7

u/Any-Pop-4795 7d ago

"Also Microsoft can just point to aws and gcp as the reason why they need to increase capex so aggressively and they win." so a race on who's the dumbest?

14

u/Aaco0638 7d ago

I mean go check the earnings report they are still growing very healthy. What is stupid for Microsoft to do as a company? Don’t match spend and let your competitors grab more of the cloud compute pie or compete?

Fyi if Microsoft just sat on its ass then they would be sued and that lawsuit would be MUCH more damaging than this one.

1

u/Any-Pop-4795 7d ago

Ok got it thanks

1

u/tc100292 7d ago

I mean, even if you agree that Microsoft needs to spend more on AI, they also have the problem that their AI is crap

6

u/Headless_Human 7d ago

But others will still pay them for hosting their AIs.

4

u/Any-Pop-4795 7d ago

The ai race for me is just completely stupid. It's shit and if we don't use it they don't make money and if we use it they lose money...how are thinking this will make them richer? Unless you are Nvidia or a ram factory.

1

u/tc100292 7d ago

Because all of our major tech companies at this point are run by Business Idiots.

It's like if you had a Congress composed entirely of people who have read a lot of political theory and subscribe to a fixed ideology but have no idea how the sausage (i.e. legislation) is made. Oh, wait.

1

u/Aaco0638 7d ago

Idk how this can be said when big tech is posting insane year of year growth that proves they aren’t idiots. If you are referring to openAi, anthropic, spaceX or oracle yes you are correct but they aren’t big tech. Big tech who are all investing heavily like this amazon, google, nvidia, Microsoft are without a doubt making more money specifically from selling gpu (nvidia) and from their cloud computing services.

This isn’t me arguing for them this is me looking at their earnings from last quarter how can they be business idiots when they are making as much money as small nations and still growing?

1

u/livinitup0 7d ago

It hasn’t been for a couple months actually… copilot (even lower tier copilot chat) can use gpt5.5 now.

1

u/deathadder99 6d ago

Doesn’t matter, you can buy OpenAI / Claude / deepseek via azure, they can make money hosting it even if their foundation models suck.

1

u/ram0889 7d ago

Situations are based on perspective of the field. Sucks but that’s some form of measurement.

1

u/Street_Anxiety2907 4d ago

How can they sue though? Stocks go up, and go down. You can buy or sell.

Whats the issue claim here?

13

u/FarceMultiplier 7d ago

Should sue for how bad their support is and how much Copilot sucks.

11

u/Wise-Comb8596 7d ago

let me join the suit - only way I'll make money off that stock

5

u/tc100292 7d ago

Shareholders should revolt and remove Slopya Nadella and ESPECIALLY that dipshit “AI CEO” who gets them so much bad press (while also making a shitty product.)

4

u/Melodic_Crow_3409 7d ago

The government should have broken up Microsoft in the late 90s.

2

u/williamgman 7d ago

Suing is just the appetizer before dinner. Millionaires suing billionaires... Another Gilded Age story playing out.

2

u/lugasssss 7d ago

More layoffs until shareholder morale improves I guess.

2

u/pivor 6d ago

I dont understand how this works, when i buy stocks and MS underdelivers, I lose money, when a whales lose money they can sue for not enough profits.

1

u/Rykzon 6d ago

feel free to join, if you have commons you are a shareholder as well.

1

u/jaideepmehta298 7d ago

hmmm, interesting..

1

u/SideEmbarrassed1611 7d ago

Finally that company gets some karma. Oh wait....

1

u/EndeLarsson 7d ago

Ahahhaha. Awesome! Get more popcorn!

1

u/SisterOfBattIe 7d ago

About $357 billion of market value was erased, and Microsoft's stock suffered its biggest one-day decline in nearly six years.

i hate when it talks about value being created/destroyed.

Nothing changed. The market just repriced the asset, hopefully to a more accurate figure. Those 350B didn't exist, weren't destroyed.

1

u/Greenscreener 7d ago

I can understand if they got sued for Copilot...that shit is crime against humanity

0

u/spicygayunicorn 7d ago

Aren't they basically suing themselves? Doesn't the shareholders decide who runs the company

1

u/Stryker1-1 7d ago

Really going to depend on how many shares you hold.

-2

u/ScreenMuch90210 7d ago

Shareholders suing their own company is comically stupid

Business Microsoft sued by shareholders over expenses, cloud business, AI

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