Investing.com -- Piper Sandler analysts maintained a positive stance on Microsoft (NASDAQ:MSFT) in a note Tuesday, despite recent weakness in its shares.
The stock has dropped 11% over the past three months, underperforming the S&P 500 by 6%.
According to Piper Sandler, this decline presents a buying opportunity for investors.
During recent investor meetings, Piper Sandler analysts discussed the ongoing growth of Azure, particularly in its AI workloads.
While there has been some moderation in non-AI Azure growth, the firm says Microsoft has made strategic adjustments.
The company consolidated two partner groups and introduced new incentives to drive both AI and digital transformation projects.
Piper notes that AI workloads on Azure grew by 157% year-over-year, and the platform remains home to significant AI applications, including ChatGPT.
While ChatGPT remains the largest at-scale AI application hosted on Azure, several F500s are moving AI into production including Alaska Airlines, Toyota (NYSE:TM), and Walmart (NYSE:WMT),” writes Piper Sandler.
Microsoft’s $80B+ in capex and lease spending for the year are focused on building a "global, fungible, and flexible" data center fleet to support future demand, especially in AI inferencing, they add.
Additionally, Microsoft’s Stargate project, a collaboration with OpenAI, are expected to bolster its infrastructure for next-gen AI models.
This strategic investment in AI infrastructure is said to further enhance Microsoft’s position in the AI race, with OpenAI’s reliance on Azure for training and inference workloads continuing to grow.
Piper Sandler’s analysts are confident that Microsoft’s broad product offering, strong cash flow, and massive $13B+ AI business will help it weather macroeconomic challenges. Despite recent volatility, the firm states: “Buy the weakness.”