European Rally Fails: Microsoft Slips, SAP Loses $45 Billion
European stocks reversed course and closed lower, after global sentiment faltered following Microsoft's results, which raised fresh doubts about how quickly its massive AI spending could translate into profits. At the same time, SAP was the center of attention in Europe after its disappointing cloud backlog report sent the market into a tailspin.
The Stoxx Europe 600 closed down 0.2% on Thursday (January 29), after rising as much as 0.8% earlier in the session. The technology sector was the main drag, while energy was relatively stronger, supported by commodity prices.
Pressure came from two directions. In the US, Microsoft plunged about 12% after the market assessed that record spending and slowing cloud business growth could mean the harvest from AI investments would take longer than expected. In Europe, SAP slumped about 16% and is said to have lost about $45 billion in market capitalization, after its announced cloud backlog was deemed less than expected.
In other individual stocks, Nokia fell 9.4% as fourth-quarter adjusted earnings weakened by about 3% from a year earlier. Conversely, ABB surged 8.5% after the Swiss company signaled higher profitability this year amid the data center boom and announced a $2 billion share buyback program.
Markets are also increasingly sensitive as European benchmark indexes have retreated from their early January records. The pattern is clear: this earnings season is "cruel"—companies that miss expectations are immediately penalized. Bloomberg Intelligence analysis shows that stocks of companies that miss expectations (or provide disappointing 2026 guidance) tend to lag the Stoxx 600 by a median of about 6.5 percentage points in the following session, while companies that raise guidance outperform by about 3.8 points on average.
Source: Newsmaker.id
