Short Sellers Smell Blood in Microsoft’s Cloud… Will a $60 Billion Buyback Stop Them?

Microsoft just threw out a $60 billion share buyback plan and cranked up its quarterly dividend by 10%. On the surface, it sounds like Microsoft’s trying to remind everyone it still has deep pockets, especially after watching its stock drop more than 7% since July. But, I wouldn’t get too excited about it until you know the details.

So let’s start with the $60 billion buyback. Microsoft buying its own stock sounds like a power move—fewer shares means more value for the ones left. It’s like ordering two pizzas, eating one, and telling everyone else that the remaining slices are now more valuable because there’s less to go around. But when your company is worth $3.2 trillion, $60 billion is pennies on the dollar. It’s less than 2% of Microsoft’s total value. For comparison, Apple recently made headlines with a $110 billion buyback, so Microsoft’s move feels more like good PR than anything.

Onto the dividends. Microsoft’s 10% dividend increase is impressive but it’s nothing they haven’t been doing for 19 years. Back in 2004, their quarterly payout was a laughable $0.08 per share. Fast forward to today, and they’re shelling out $0.83 per share, a staggering 937% increase. If you bought Microsoft back in 2004 when the stock price was around $30, your $10,000 investment would have snagged you roughly 333 shares. 

Fast forward to today, with Microsoft’s stock at about $330, and those shares (plus dividends) would be worth over $110,000. That’s a more than 1,000% return. Not bad, right? But dividends are the icing, not the cake. Microsoft’s got bigger issues behind the scenes that a quarterly payout can’t hide.

Microsoft’s cloud darling, Azure, is where the real story lies. The latest quarterly earnings report showed a 15% revenue bump, but Azure’s growth didn’t hit the numbers investors were dreaming of. And when you’re up against Amazon Web Services and Google Cloud, “just okay” isn’t going to cut it. Microsoft’s promising better results by the second half of fiscal 2025, but they’ve got to keep that promise. In the cutthroat cloud world, there’s no room for slip-ups.

To add to the tension, short interest in Microsoft stock spiked by 20.1% in August, reaching 65.8 million shares. For those keeping score, that means a bunch of people are betting that Microsoft’s stock is going to fall even further. While 65.8 million shares might seem small in the grand scheme of things, it’s still a sign that some investors smell trouble brewing. And these aren’t amateur hour bets—short sellers don’t pile on unless they think they smell blood in the water.

Then there’s the AI hype. Microsoft has been throwing money at artificial intelligence like it’s the future of everything—because, well, it kind of is. Capital spending jumped 77.6% last quarter, mostly on AI infrastructure. They’ve sprinkled AI magic across their entire product line, from Teams to Outlook, but the real question remains: Will all these billions actually turn into serious revenue?

Everyone’s hyped about AI like it’s going to solve world hunger and make you breakfast in bed, but Microsoft’s AI play is still like that one friend who keeps saying they’ll “totally start working out next week”—a lot of promise, no visible results. They’ve thrown billions at this future-tech dream, but until they can show it’s more than just a costly experiment, it’s a big, shiny question mark with a hefty price tag.

Sure, that $60 billion buyback and dividend hike might calm some nerves, but it’s like slapping a Band-Aid on a broken arm—it won’t fix the real issues. Azure’s tripping over itself, short sellers are sharpening their knives, and AI’s potential is still waiting to pay rent. Microsoft’s definitely in a transition phase, and investors are side-eyeing them hard. One slip, and the wolves are ready to pounce.

P.S. Our last alert shot up 96% in under 48 hours, but this next play? That could look like pocket change compared to what’s coming. We’ve got 151,000 shares shorted, 268,000 on loan, and oh yeah—the cost to borrow? A casual 359%. Oh, and did I mention there are zero shares left to borrow? That’s right, 359%.

This setup is like a lit match next to a gas can, and things could blow sky-high any moment. Don’t be the one kicking yourself later—click here now for all the details before the next big move.

Stock.News has positions in Microsoft, Amazon, Google, and Apple.