Microsoft’s 2.2% Drop Tests Its $18.6 Billion Cash Flow

By Amara Osei

Microsoft shares fell 2.2% on Tuesday after Anthropic unveiled Claude Sheets, a spreadsheet tool that resembles Microsoft Excel, according to Phil Rosen of Opening Bell Media. Anthropic also introduced new whiteboard and office products.

Rosen, co-founder and CEO of Opening Bell Media and chief market strategist at Silvia, described Tuesday’s move as a replay of the episode nine months earlier. In the first quarter, Anthropic released a series of plug-ins for Claude that triggered broad selling in Microsoft, Adobe, Salesforce and other software stocks.

Did Microsoft’s February dip deliver a stronger rebound?

He wrote that “buying the dip on Microsoft paid off handsomely.” The iShares Expanded Tech-Software ETF fell 4.6% in one day in early February, while Microsoft dropped 2.9%. An investor buying Microsoft at that close would have gained 29.7% as of Tuesday, compared with 17.5% for the software ETF, Rosen calculated.

Microsoft’s recovery was not linear. The stock slid another 14.2% in late June before returning to recent highs. Even after Tuesday’s 2.2% decline, it remained just 4% below its record close from November 4, according to Rosen.

Price action and financial capacity diverged in Rosen’s account. The stock absorbed two Anthropic-related scares and a separate June selloff, yet the November 4 record remained within reach. Tuesday’s 2.2% decline tested the rebound thesis without changing the cash-flow comparison Rosen considered decisive.

How does Microsoft’s Anthropic investment affect the competition?

Rosen said Microsoft has a direct financial connection to its new competitor through the Anthropic investment. Microsoft is one of seven companies slated to buy into a $26 billion private placement at Anthropic’s IPO price. The deal places Microsoft among Anthropic’s IPO investors alongside six other companies.

The $26 billion placement gives the product launch a complicated investment context. Rosen framed the investor question as whether Claude Sheets and the accompanying whiteboard and office products will produce the same rebound that followed February’s “SaaSpocalypse.” Its earlier 29.7% gain set the precedent, while the 4% gap to the November 4 record showed how much recovery remained.

Can Microsoft’s cash cushion blunt another software scare?

Rosen wrote: “The differentiator for Microsoft against its mega-cap peers, however, is cash.” Microsoft generated $18.6 billion of free cash flow last quarter, which he described as evidence that its cash flow remained as robust as ever. That leaves Microsoft among the few hyperscalers able to fund its AI buildout with cash it earns.

Rosen’s cash-flow comparison with mega-cap peers was stark. His figures separated Microsoft’s position from the four peers he cited:

• Microsoft: $18.6 billion in free cash flow last quarter and a positive result after counting $7.4 billion of finance leases.
• Meta, Oracle, Alphabet and Amazon: negative free cash flow in their latest quarters; Amazon alone burned through $34.8 billion.

Rosen’s comparison puts funding capacity at the center of the investment case. A 4.6% sector decline can reprice software equities quickly, while Amazon’s $34.8 billion cash burn stands in sharp contrast to Microsoft’s ability to self-fund AI investment. Microsoft’s $18.6 billion in internally generated cash gives it more room to absorb product disruption.

Rosen said the financial exposure runs both ways: Microsoft is slated to invest in Anthropic at IPO pricing while Anthropic challenges Excel with Claude Sheets. Under his framework, another February-style shock, when Microsoft fell 2.9%, would test Microsoft’s cash position and its room to fund the AI buildout.

If the wider office lineup extends the selloff, the $18.6 billion in quarterly free cash flow becomes Microsoft’s measurable buffer. The next test is whether that buffer can protect a stock sitting 4% below its November 4 record close.