All this might seem bizarre as the company reported a 15 per cent increase in quarterly revenues to $64.7 billion, while profits rose by 10 per cent to $22 billion.

While those numbers were better than the cocaine nose jobs of Wall Street expected investors panicked by slightly lower-than-expected sales in its cloud computing division, which is considered the company's main growth driver.

When we say lower than expected, we mean slightly lower. But Wall Street has been nervous about last week's disappointing results from Google's parent company Alphabet, a competitor in the AI race.

The Seattle-based company has been leading in AI due to a major investment in OpenAI, the US start-up behind ChatGPT, and is spending billions on building the computing infrastructure needed for the next generation of systems.

However, tech stocks have fallen recently due to fears of overspending and concerns that AI is not generating revenues matching the hype.

On Tuesday, shares in Nvidia, the microchip company seen as the poster child of the AI boom, fell by more than six per cent.

Microsoft's figures triggered a broader sell-off in after-hours trading, with Nvidia falling a further two per cent and British semiconductor company Arm dropping 2.6 per cent.

The Nasdaq index, dominated by big tech companies, is currently at its lowest level in two months, although it has still risen by 16 per cent this year.

The so-called "magnificent seven" of Microsoft, Apple, Tesla, Alphabet, Meta, Amazon, and Nvidia have lost $1.5 trillion in value over the last three weeks.

Meta is set to report quarterly figures on Wednesday, followed by Amazon and Apple on Thursday.