Microsoft’s $480 billion rally fuels a debate: financial nihilism or the true AI moat, finally coming into view?

Microsoft added nearly $500 billion in market value ($480 billion, to be exact) in a single trading session on Thursday—a more than 17% surge—after reporting fiscal fourth-quarter results that showed Azure revenue surpassing $100 billion for the first time, with Microsoft Cloud revenue up 27% year-over-year to $59.3 billion.

But blowout results, even those released within hours of Microsoft’s, haven’t been greeted with similar euphoria. Take Samsung, which posted a record $62 billion profit, a 19-fold increase, and then saw stocks sell off, or Meta, punished after another quarter of growing revenue. The Dow fell more than 1,100 points on Wednesday, before Microsoft reported its blowout quarter after the close.

Three market watchers looked at the same week and came away with three different explanations for why.

The leverage argument

Steve Sosnick, chief strategist at Interactive Brokers, had told Axios earlier in the week that the market narrative had flipped from “all news being good news for AI” to something like “let’s look under some rocks and see what the risks are.” After Microsoft’s earnings, he laughed as he told Fortune the story had changed “just a tad.” But he didn’t think the fundamental question was resolved. “We are in a ‘rip up the script every day’ kind of mode,” he said.

To Sosnick, this week’s swings are simply too large and too fast to be explained by fundamentals alone. Microsoft jumping 17%, Micron rising 18% on unremarkable news, IBM getting cut 25% on a profit warning weeks earlier — these are the kinds of moves that make him uncomfortable. He acknowledged it was a “cliche” to go there, but then he went there: “I hate to say it, but the only time I can recall these sort of swings is the 1999, 2000 period.” That era’s dot-com bubble also saw “everybody rushing in and out of stocks,” he added.

What worries him more than the historical parallel is that today’s market has far more tools to amplify those swings than it did back then: weekly options, leveraged ETFs, and other products that simply didn’t exist a generation ago. He stopped short of blaming them directly — “I’m not going to say they cause the volatility, that’s not fair” — but sees a “generational” effect running through the market’s behavior, invoking the “financial nihilism” framing that some see active in markets.

That framing lines up with a growing body of research. A Harris Poll found 46% of Gen Z respondents agree that “no matter how hard I work I will never be able to afford a home I really love,” while........

© Fortune