TLDR:
Microsoft has been downgraded by investment firm D.A. Davidson due to fears that its lead in artificial intelligence over competitors like Amazon and Google has diminished. This has prompted the firm to change Microsoft’s rating from buy to neutral, while maintaining a price target of $475. The competition in the cloud computing space is increasing, with Amazon Web Services and Google Cloud Platform posing significant threats to Microsoft’s Azure platform.
- Microsoft downgraded by D.A. Davidson due to fear of lost AI lead
- Competitors catching up in cloud computing space, impacting Microsoft’s performance
Key Elements:
Investment firm D.A. Davidson downgraded Microsoft from buy to neutral
Rivals like Amazon Web Services and Google Cloud Platform have caught up to Microsoft in the artificial intelligence space
Microsoft’s early investment in OpenAI and capabilities in Azure and GitHub gave it an edge, but competitors are now close in cloud business and code generation
Amazon and Google are ahead in deploying their own silicon into data centers, giving them an advantage over Microsoft
Microsoft may not be able to keep up in the ongoing arms race in the cloud computing space
Full Article:
Microsoft has been downgraded by D.A. Davidson due to fears that its lead in artificial intelligence (AI) over competitors, such as Amazon Web Services and Google Cloud Platform, has been lost. The investment firm changed Microsoft’s rating from buy to neutral, while analysts maintained a price target of $475, which is approximately 9% higher than the closing stock price on Friday. The justification for Microsoft’s premium valuation has been questioned as rivals seem to have caught up in the AI space. Microsoft’s early investments in OpenAI and its capabilities in Azure and GitHub allowed it to excel in the past, but competitors are now posing significant threats. Amazon Web Services and Google Cloud Platform are accelerating in the cloud computing space, putting pressure on Microsoft’s Azure platform.
According to analyst Gil Luria, Amazon and Google are ahead in deploying their own silicon into data centers, giving them an edge over Microsoft. While Microsoft has discussed its Maia chips, it appears to be lagging behind its competitors in this area. This technological disadvantage may hinder Microsoft’s ability to keep up in the ongoing cloud computing arms race. The investment firm believes that Microsoft’s lead in both the cloud business and code generation has diminished, making it challenging for the tech giant to continue outperforming its competitors.