Microsoft stock downgraded at Oppenheimer on ‘too high’ earnings estimates

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Microsoft stock downgraded at Oppenheimer on ‘too high’ earnings estimates

The firm’s analysts point to potential losses from OpenAI, Microsoft's partner in AI technology development, as a key concern. OpenAI is expected to incur a loss of approximately $5 billion this year, and with Microsoft holding a 49% stake, a substantial portion of this loss could impact the company's financials.

Oppenheimer anticipates Microsoft's CapEx to reach $63 billion in 2025, marking a 14% year-over-year increase and doubling from 2023, with associated depreciation expenses expected to rise by 28% to $29 billion. “This will translate into 3% EPS growth in 1Q25 and we expect weakish guidance for 2025. We also think the Street estimates for EPS growth are ~200bps too high in FY26 and FY27,” they said in a note.

 

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