Microsoft edges up; DA Davidson raises to 'buy' on focused AI spending

Microsoft's shares MSFT.O edge up 0.4% at $384.83 premarket

D.A. Davidson & Co upgrades stock to "buy" rating from "neutral" and raises PT to $450 from $425, representing about a 17% upside to stock's last close

Brokerage says MSFT has now rationalized its approach to capital expenditure

MSFT is now offloading less desirable capital expenditure to CoreWeave, Oracle <ORCL.N> and SoftBank 9434.T - brokerage

Brokerage says MSFT has decided to reduce the allocation of its data center resources for OpenAI's LLM training as performance improvements from pre-training have started to plateau

The entire Stargate project is based on OpenAI's need to find new training capacity as MSFT is no longer interested - brokerage

MSFT gets to maintain exclusivity to handle OpenAI's ChatGPT inference workloads, while offloading more variable and resource-intensive training workloads to other providers - brokerage

Avg rating of 57 brokerages covering the stock is "buy," their median PT is $500 - LSEG

Up to last close, MSFT has fallen ~5% over the past 12 months