Microsoft’s AI Lead Shrinks: Analyst Downgrades Stock As Amazon And Google Close The Gap
DA Davidson analyst Gil Luria downgraded the rating on Microsoft Corp (NASDAQ:MSFT) to Neutral from Buy while maintaining a price target of $475.
Luria noted competition has essentially caught up with Microsoft on the AI front, which reduces the justification for the current premium valuation.
The analyst now ranked Microsoft fourth within the Magnificient Six. The stock increased 92% since his January 2023 initiation, compared to 49% for the S&P500.
Luria noted that Microsoft has accelerated growth and extended margins over the last few quarters as the first to embrace and commercialize generative AI. Through an early investment in OpenAI and the ability to quickly deploy capabilities within Azure and GitHub, it took a significant lead over Amazon.Com Inc (NASDAQ:AMZN) Amazon Web Service and Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) Google Cloud, which translated to superior results over the prior 4-6 quarters.
The analyst noted that Microsoft’s lead is now diminished in both …
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