The Joseph Carlson Show The Microsoft Stock Sell-Off Explained
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Jan 29, 2026 A walkthrough of a rare 12% Microsoft sell-off and what drove the market reaction. Discussion of OpenAI’s influence on corporate finances and concerns about circular financing. Review of Meta’s AI spending and strong results. Highlights on ASML’s buybacks, MasterCard’s shift to services, and Tesla’s pivot toward AI and robotics.
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OpenAI Dominates Microsoft's Reported Growth
- Microsoft’s headline numbers looked strong but many gains were driven by OpenAI-related accounting and commitments.
- Investors re-rated Microsoft when they learned OpenAI accounted for ~45% of commercial RPO and $7.1B in equity gains.
Accounting Boosts Mask Organic Performance
- Much of Microsoft's EPS, EBITDA and free cash flow spikes were driven by OpenAI valuation accounting rather than organic operations.
- Excluding OpenAI effects, EPS growth falls from ~60% to ~24%, and RPO growth drops to ~28%.
Circular Financing Raises Concentration Risk
- OpenAI’s large cloud commitments appear funded largely by Microsoft, creating circular financing.
- That makes reported Azure backlog growth partly self-funded and increases concentration and risk.