The Microsoft Hack Affected Some of the Highest Levels of Government. The Stock Is Up.

(JULIEN DE ROSA/AFP via Getty Images)

As details about the cyberattacks on Microsoft SharePoint servers have trickled out, the situation has sounded more and more concerning. Microsoft stock, however, barely has budged.

Microsoft initially disclosed the hack on July 18, saying it was aware of “active attacks” against SharePoint Server customers that exploited vulnerabilities partially addressed by an earlier security update.

Several U.S. government agencies, including the Department of Homeland Security and the National Institutes of Health, were breached, according to multiple reports. A DHS spokesperson confirmed a SharePoint vulnerability in a message to Barron’s, adding “there is no evidence of data exfiltration at DHS or any of its components at this time.” The NIH did not immediately respond to a request for comment.

Among the impacted agencies was the U.S. National Nuclear Security Administration, or NNSA, which manages the country’s nuclear weapons arsenal. (No sensitive information is believed to have been breached, and a spokesperson for the Department of Energy, which oversees the NNSA, told Barron’s the department “was minimally impacted.”

Those revelations followed a Tuesday blog post from Microsoft alleging that hackers linked to the Chinese government had exploited security vulnerabilities in the company’s SharePoint Server platform, which organizations use to share files and collaborate. Microsoft is now probing whether it tipped off the actors, Bloomberg reported Friday.

Barron’s has reached out to Microsoft for comment. In a press conference Wednesday, Chinese Foreign Ministry Spokesperson Guo Jiakun said he was not familiar with the specifics of the attacks.

You’d think that if groups of alleged foreign cybercriminals are using weaknesses in a popular enterprise software to hack into—among other things, a nuclear weapons agency—investors may get skittish. Not so. Through Friday’s close, Microsoft stock is up 0.4% since July 17, the day before news of the attacks first broke.

One key reason for the muted reaction is that major hacks have become the cost of doing business for technology and cybersecurity companies, analysts on Wall Street said.

“While the breaches are concerning, investors have become somewhat desensitized,” Gil Luria of D.A. Davidson told Barron’s. Hacks and outages have become frequent, Luria added, but they tend to have, at worst, minor financial costs.

Luria pointed to the cybersecurity company CrowdStrike Holdings as one recent example. CrowdStrike stock plummeted after the company’s faulty software update last July caused a global technology outage, but analysts saw the sell-off as an opportunity to buy rather than viewing the breach as an existential threat. They were vindicated: shares have climbed more than 80% in the last year. (CrowdStrike apologized for the outage and admitted to weaknesses in its procedures, but noted the issue wasn’t the result of a hack, as Barron’s reported at the time.)

It helps that Microsoft has proven in the past that it can address cyberattacks “with no meaningful repercussions,” said Brent Thill of Jefferies.

In fact, Microsoft’s latest digital defense report found that its customers faced 600 million attacks daily from cybercriminals and nation-state actors between July 2023 and July 2024.

Microsoft has responded well to the most recent attacks, as opposed to ignoring the problem, argued Rishi Jaluria of RBC Capital Markets. If anything, the attack “likely presents an opportunity for Microsoft to grow their security momentum,” Jaluria told Barron’s.

None of this is to say hacks are unimportant—shareholders just have other issues on their mind.

Ahead of Microsoft’s fiscal fourth-quarter earnings report on July 30, investors mostly are paying attention to the company’s artificial intelligence work and Azure cloud-computing business, rather than SharePoint, Jaluria said.

Within the SharePoint business, the fact the attacks impacted on-premise servers, support the “cloud transition story,” Jaluria added.

It would be a surprise if Microsoft doesn’t address the breach in some way on Wednesday. But if recent history is anything to go by, don’t expect those comments to move the stock much, if at all.

– Elsa Ohlen contributed to this article.

Write to Nate Wolf at nate.wolf@barrons.com