Tech giant Microsoft’s stock has been considered a safe bet for a long time. However, analysts over at D.A. Davidson don’t believe that’s the case anymore.
Davidson’s analysts gave Microsoft’s stock a rare downgrade from “Buy” to “Neutral.” They left their price target unchanged, keeping it at $475 compared to Monday’s closing price of $433.51 per share.
According to the investment firm, Microsoft is allowing competitors like Amazon and Google to challenge its leading position in employing artificial intelligence across its infrastructure and products. They believe that the company became too reliant on sourcing chips from semiconductor giant Nvidia, which will cost them their dominant position in the cloud market.
“Going forward, we think AWS [Amazon Web Services] and GCP [Google Cloud Platform] actually have an advantage over [Microsoft] Azure because they have the capability to deploy their own chips into their data centers, which are a fraction of the cost of an Nvidia GPU — something Microsoft has yet to do with its own chips,” D.A. Davidson’s managing director Gil Luria explained in a chat with Yahoo Finance.
Despite the downgrade from Davidson, Microsoft’s shares mostly remained flat on Monday. The company’s stock remains 16.89% up year-to-date but 7% down from its 2024 high in July.