Microsoft could be the cloud sector's 'canary in the coal mine,' even as AI efforts offer promise

Microsoft Corp. has big opportunities ahead in artificial intelligence, but first the company must contend with a slowdown in the cloud computing business that threatens to envelop the broader software industry.

While Microsoft MSFT executives were upbeat Tuesday about their ability to capitalize on AI, including through a new investment in the popular creator of ChatGPT, Wall Street couldn’t ignore the more immediate-term forecast that accompanied Microsoft’s latest earnings report.Shares of the technology giant were down 3.

He downgraded Microsoft shares to market perform from outperform following the report, writing that the stock could be held in check until Azure growth stabilizes. Bernstein analyst Mark Moerdler highlighted that Microsoft’s issues seem to be part of a bigger story of industry caution and aren’t simply problems of its own making, but that’s not to say the company won’t see “mixed results.”

JPMorgan analysts floated similar industry concerns, though they kept an overweight rating on Microsoft’s stock. Luria touched on the company’s “multibillion-dollar” investment in ChatGPT-maker OpenAI announced Monday.

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