Microsoft Upgraded Amid Artificial Intelligence Push
Microsoft has been one of the best-performing stocks, rallying by more than 30%. The rally, which has seen it outperform the S&P 500, which is up by about 15%, has come on the tech giant benefiting from the artificial intelligence boom. With the boom, many analysts and investors have turned bullish and confident about the company’s long-term prospects as it continues to explore ways of benefiting from the AI boom.
The upgrade from a sell to a neutral rating means that nearly 90% of analysts have a buy rating on the stock, with the rest maintaining a sell rating. The recommendation consensus on the stock stands at 4.74 out of 5, which is the fourth highest in the Nasdaq 100 index.
Following the upgrade, the stock does not have any sell rating on the street. However, the analysts at Guggenheim are still on the fence, thus the neutral rating. The analysts are questioning how much of the generative AI narrative will be monetized and generate significant value for Microsoft and other companies betting on the technology.
In addition, in a research note to investors, Guggenheim has also raised concerns about Microsoft’s struggles with its Windows product, which it says faces troubling dynamics. The research firm also feels growing pains in the market with the Azure cloud computing business, which could weigh on the stock’s sentiments.
Microsoft faces stiff competition to strengthen its cloud edge. Google and Amazon have also been spending big, especially on artificial intelligence innovations and solutions to strengthen their cloud unit. Competition from other smaller players also poses significant competition and danger to Azure Cloud.
Nevertheless, Microsoft is also maintaining a close eye on artificial intelligence, a technology expected to impact various solutions and products significantly. The software giant has already invested more than $10 billion in AI startup OpenAI, consequently gaining access to ChatGPT, one of the most talked about chatbots.
Microsoft AI Push
Microsoft CEO Satya Nadella has already made it clear that the company that becomes a market leader in artificial intelligence will garner a lion’s share of the riches in the technology over. Therefore, the executive is going all out to make Microsoft, a leading provider of AI solutions to, cash in on the new trend.
The $10 billion investment in OpenAI has enabled Microsoft to integrate ChatGPT in its search engine, Bing, strengthening its competitive edge against Google search. In addition, the search giant has also gained access to OpenAI AI resources and development resources. In return, Microsoft has built its own AI products and services, including Azure AI, a cloud-based service that offers access to tools for developing AI solutions.
Microsoft has also started integrating AI solutions into its traditional products, including Word, Outlook, and PowerPoint. It’s also developing new features such as Windows Copilot, an AI assistant for Windows devices. Competition for AI dominance is stiff, with Amazon, Google, and Meta Platforms also investing billions of dollars into emerging technology.
The AI boom spectacle also has been priced in significantly. Microsoft stock has come under pressure in recent days, recording seven consecutive days of losses. Nevertheless, the stock is still up by more than 30% for the year.