Guggenheim analysts upgraded Microsoft (NASDAQ: MSFT ) shares to Neutral from Sell. Therefore, there are no more sell-side analysts that rate Microsoft with a Sell or equivalent rating.
Analysts admit they were “dead wrong” to recommend Microsoft as Sell. Their prior price target was $232 per share, signaling a downside risk of over 35%.
“The Generative AI narrative is too positive a force to contend with, even though the troubling dynamics we thought might develop, did,” they said in a client note.
These “troubling dynamics” include Windows and the broader PC market facing challenges as it became clear that the surge in demand during the COVID-19 pandemic was not sustainable, the analysts wrote.
Moreover, PC shipments were initially boosted by remote work and learning trends, similar to the rise of platforms like Zoom (NASDAQ: ZM ) and DocuSign (NASDAQ: DOCU ). However, the sustained relevance of PCs has come into question. Microsoft's cloud platform, Azure, has encountered difficulties attributed to several factors, including market maturity, macroeconomic conditions, and heightened competition from new entrants.
On the other hand, The Office business has seen incremental traction, driven by factors such as price increases implemented a year ago and the renewal of agreements made three years ago, which involved lower discount levels and thus resulted in higher prices.
“And like every other person on the planet, we’ve come to expect that the GenAI “narrative” will become more than just a story, though we still question how much monetization will be realized and over what timeframe,” analysts further noted.
Microsoft shares rose 0.3% today.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.