Bullish Microsoft Analysts Say AI Spending Worries Are Overblown

Despite Microsoft's (MSFT) earnings beat, worries astir weaker-than-expected cloud growth and spending connected artificial intelligence (AI) sent shares little successful nan aftermath of nan company's quarterly update.

Bullish analysts opportunity those concerns could beryllium overblown, citing nan company's imaginable to summation from AI.

The tech giant's shares mislaid a spot much than 1% to adjacent astatine $418.35 Wednesday. The banal has gained complete 11% since nan commencement of nan year. Analysts are broadly bullish connected nan shares, pinch a mean target value supra $500 according to Visible Alpha.

Why Bulls Say Microsoft's Results Reinforce Its AI Potential

Despite "a lackluster extremity to an different strong" fiscal year, Mizuho analysts said they beleive Microsoft's medium- and longer-term gross maturation opportunities are "greater than galore realize," citing opportunities successful generative AI.

Deutsche Bank analysts wrote that Microsoft is "leading nan charge" successful AI monetization pinch its Azure AI services and gross group to turn arsenic nan institution raises capacity.

In Microsoft's earnings telephone Tuesday, executives said capacity constraints played a cardinal domiciled successful holding backmost nan company's unreality maturation and suggested that it's investments successful AI could lead to double-digit gross maturation arsenic Microsoft's capacity catches up pinch surging demand.

That is portion of what led Goldman Sachs analysts to telephone Microsoft "one of nan astir compelling finance opportunities" successful tech, drafting a comparison betwixt its existent AI investments and nan spending surge seen from 2010 to 2017 to build nan unreality business that now drives earnings.

"The takeaways for nan broader tech assemblage is this AI monetization communicative is real, " Wedbush analysts said.