Street View: Microsoft's AI strategy to reinforce long-term value creation

Microsoft MSFT.O said on Wednesday it had spent a record amount on artificial intelligence in the last quarter and posted slower cloud-computing growth, worrying investors who had expected a major payoff from the outlay and its mega-deal with OpenAI

Shares down 5.6% at $454.5 premarket

FOCUS ON DEMAND BOOST

BofA Global Research ("buy," PO: $640) says the shift to short-lived assets like GPUs and CPUs validates that MSFT could reverse supply chain constraints near term

Piper Sandler ("overweight," PT: $600) says it is bullish on MSFT due to sustained demand outpacing supply, capex prioritizing rapid GPU/CPU expansion, and robust commercial RPO growth driven by strong OpenAI contributions

Barclays ("overweight," PT: $600) says MSFT shifting its focus from accelerating Azure growth to prioritizing its first-party offerings like Copilot might signify that investors will not see numbers change significantly for a while

"For longer-term investors, this should be positive news, as it shows MSFT management cares about long-term value creation" -Barclays

J.P.Morgan ("overweight," PT: $550) expects solid demand going forward with M365 Copilot kicking into gear