Microsoft Stock Takes a Hit Amid Weak Jobs Data

September 5, 2025 19:36

Key Points

• Microsoft shares dropped today following disappointing August employment figures
• Weak job numbers suggest economic trouble despite likely Fed rate cuts
• New semiconductor tariffs threaten to increase Microsoft’s operational costs

Microsoft’s stock is sliding in Friday’s trading session, down 2.8% as of 3 p.m. ET, significantly underperforming broader market indices. The S&P 500 and Nasdaq Composite were down just 0.5% and 0.2% respectively at the same time.

The tech giant’s decline comes primarily in response to the Bureau of Labor Statistics’ latest employment report, which revealed alarmingly weak job creation. While economists had predicted 75,000 new non-farm jobs in August, only 22,000 materialized. Making matters worse, June’s numbers were revised from a gain of 14,000 jobs to a loss of 13,000.

I can’t help but feel this jobs report exposes a more fragile economy than many wanted to admit. Sure, it strengthens the case for interest rate cuts this month, but what good is cheaper money if the underlying economy is crumbling?

Adding to Microsoft’s woes, the Trump administration announced new tariffs on foreign-manufactured semiconductors. This policy reversal is particularly troubling for Microsoft, which relies heavily on chips from Nvidia and other manufacturers that produce their components in Taiwan.

The timing couldn’t be worse. Just as Microsoft pours billions into AI infrastructure, these tariffs threaten to jack up costs across their entire operation. While American chip designs might originate stateside, the actual manufacturing happens overseas – and now that critical supply chain faces significant disruption.

Frankly, this combination of economic warning signs and policy headwinds makes Microsoft’s premium valuation look increasingly difficult to justify. The company faces potential margin compression just as economic conditions deteriorate – a dangerous combination for shareholders who’ve grown accustomed to steady growth.

Image source: Getty Images

Keith Noonan has no position in any of the stocks mentioned.

Disclaimer: For information purposes only. Past performance is not indicative of future results.