Microsoft sees $17 billion of market value erased in just 5 minutes after a judge grants Amazon's request to block a key cloud contract

Sean Gallup/Getty ImagesMicrosoft CEO Satya Nadella

• A federal judge on Thursday approved a motion by Amazon to have the Defense Department suspend work on the JEDI cloud contract Microsoft won last year.
• Shares of Microsoft fell as much as 1% on Thursday afternoon.
• The move erased $17 billion from the technology giant's market capitalization in just a few minutes.
• Watch Microsoft trade live on Markets Insider.

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Microsoft shares declined sharply Thursday afternoon immediately after a federal judge ordered a temporary halt on the JEDI contract awarded to the company by the Pentagon last year.

Shares turned negative in a matter of minutes, slipping from $185.40 at 2:11 p.m. Eastern time - a 0.4% increase on the day - to an intraday low of $183.16 as of 2:16 p.m. The stock bottomed out with a 1% loss shortly thereafter.

Put differently, the technology giant shed $17 billion from its market capitalization in just five minutes.

Microsoft's market value is now about $1.4 trillion, according to Bloomberg data. It's the third-most valuable company in the world behind Apple and Saudi Aramco, worth $1.43 trillion and $1.77 trillion respectively.

The judge's ruling comes after Amazon last week filed a motion to have the Defense Department suspend work on the key $10 billion contract called the Joint Enterprise Defense Infrastructure project. The job is to build a cloud for the storage and management of sensitive military and defense data.

Microsoft won the contract over Amazon last year in a surprise upset. After the loss, Amazon challenged the decision by the Pentagon, accusing the agency of "clear deficiencies, errors, and unmistakable bias" against the company.

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"It's important that the numerous evaluation errors and blatant political interference that impacted the JEDI award decision be reviewed," an Amazon Web Services spokesperson told Business Insider's Benjamin Pimentel. "AWS is absolutely committed to supporting the DoD's modernization efforts and to an expeditious legal process that resolves this matter as quickly as possible."

Shares of Amazon rose briefly following the announcement on Thursday, but then turned negative.

Microsoft closed at a record high of $188.70 per share on July 10, and has gained roughly 16% year-to-date.

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