Microsoft 365 Outage Stretches Into Second Day Across 74 Countries as Nvidia Turmoil Batters Markets

A major Microsoft 365 outage that began Thursday before 1 p.m. ET stretched well into Friday, cutting off Outlook, Teams, SharePoint and Copilot for users in 74 countries and ranking among the company's most severe disruptions in recent memory. Downdetector recorded more than 130,000 US Outlook problem reports at the peak, while Microsoft 365 separately drew more than 38,000 reports. Banks, government agencies and courts were disrupted worldwide, traders were forced onto phones and fax machines, and the UK's National Health Service rescheduled procedures. The outage cascaded outward, interrupting Microsoft-linked features in OpenAI's ChatGPT and Anthropic's Claude. Microsoft ruled out malicious activity and attributed the breakdown to overloaded infrastructure and unresponsive servers, later pointing specifically to a faulty server. The company extended its email timeout window to 48 hours as a contingency measure.

Recovery was gradual and uneven. Microsoft reported completing remediation across portions of Asia-Pacific infrastructure first, then announced encouraging progress in Europe, with service availability and email delivery improving across a growing share of affected Microsoft 365 infrastructure. By early afternoon UTC, Microsoft said email backlogs were close to normal, though some users still faced spotty access or delayed messages. The company apologized for the disruption. Microsoft shares fell roughly 3 percent in premarket trading, while cybersecurity rivals CrowdStrike and Palo Alto Networks each climbed about 3 percent as investors rotated toward alternatives.

The outage compounded an already punishing week for technology markets dominated by the fallout from Jensen Huang's resignation as Nvidia CEO. Huang stepped down Thursday after reports of an affair with Alice Huang, a businesswoman US officials suspect was recruited by Chinese intelligence to target him, though the Office of the Director of National Intelligence described the spy label as "not entirely accurate and over-torqued" and the CIA had not confirmed she knowingly passed information to Beijing. Bloomberg reported that a company Alice Huang founded, now majority-owned by her sister, obtained US-restricted Nvidia H100 and H200 chips that were installed at a Shanghai data center run by her husband, Kang Wei. Reuters separately identified more than $3.2 billion in Chinese AI projects built on restricted Nvidia chips, including models from DeepSeek, Moonshot AI, MiniMax and Ant Group that a research group said showed fingerprints of Blackwell GPU training.

Nvidia CFO Colette Kress, whom Huang had publicly belittled as "a deer in the headlights" at an August meeting where she challenged his riskiest financing bets, is now interim CEO. The Wall Street Journal reported she earlier scaled back Nvidia's commitment to OpenAI's Ohio data center from roughly $250 billion in discussed credit to $105 billion. Nvidia's board told CNBC it has not formally engaged any candidates and has not selected a search firm, calling speculation premature. However, the Financial Times reported the board has approached Arm CEO Rene Haas, an Nvidia alumnus who spent approximately seven years at the company, as a potential successor. Arm shares pared losses on the report while prediction markets placed Haas as the leading candidate at around 33 to 34 percent probability.

Treasury Secretary Scott Bessent publicly blamed Commerce Secretary Howard Lutnick, saying Treasury, the Defense Department, USTR and State had favored placing Megaspeed International on the export control entity list for months while Commerce declined to act. Lutnick agreed to testify voluntarily before the Senate Banking Committee on December 10. Bipartisan lawmakers raised questions about whether Nvidia adequately vetted its clients, with Bessent asking directly whether the company knew its chips were flowing to pass-through shell companies. Nvidia has shed roughly $500 billion in market capitalization this week and is down about 30 percent over the past month, though it still carries an approximately $4 trillion valuation. AMD outperformed Nvidia by 53.2 percentage points over five trading days, with AMD rising 44.7 percent while Nvidia fell 8.5 percent, the widest gap since Nvidia's 1999 IPO. On Friday, AMD fell 10.5 percent, Broadcom dropped roughly 6.6 percent and Intel slid about 6 percent as a broader chip selloff resumed. The Nasdaq 100 fell 2.4 percent to an intraday low and the S&P 500 dropped 1.1 percent, compounded by October PPI rising to 6.5 percent, its highest since November 2022, and the 10-year Treasury yield topping 5 percent. Markets priced a greater than 90 percent probability of a Federal Reserve rate hike in December, and Bank of America revised its forecast to include three consecutive hikes in December, January and March.