Microsoft stock receives rare downgrade as analyst says it's 'beholden' to Nvidia

Published On Sep 23, 2024, 2:25 PM

Microsoft (MSFT) received a downgrade from analysts at D.A. Davidson due to concerns about its reliance on Nvidia (NVDA) for AI infrastructure. The downgrade suggests that Microsoft's competitive edge in AI is weakening, allowing rivals like Amazon and Google to catch up. D.A. Davidson maintained a price target of $475, indicating a potential upside of about 8%. Despite this, Microsoft reported growth in its Azure revenue driven by AI contributions. Microsoft's stock hasn't seen significant movement following this news, but the situation is indicative of broader challenges within the tech sector regarding AI dependence.

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The downgrade implies a cautious outlook for Microsoft as analysts highlight its dependency on Nvidia, potentially affecting its market position. As competitors strengthen, Microsoft may face challenges staying ahead in the AI race, limiting growth prospects in the short term despite current profit contributions from AI.

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