Microsoft Stock Down Seven Weeks In A Row
According to an analysis of Microsoft’s (NASDAQ: MSFT) shares, a small Friday rally kept the stock from falling for the eighth week. According to Bloomberg, the 2008 market collapse, which was part of the Great Recession, was the last time there was an eight-week drop. The reprieve hardly mattered. To some extent, investors believe Microsoft […] The post Microsoft Stock Down Seven Weeks In A Row appeared first on 24/7 Wall St..
According to an analysis of Microsoft’s (NASDAQ: MSFT) shares, a small Friday rally kept the stock from falling for the eighth week. According to Bloomberg, the 2008 market collapse, which was part of the Great Recession, was the last time there was an eight-week drop. The reprieve hardly mattered. To some extent, investors believe Microsoft is in trouble because of a massive bet on AI.
At first glance, the Microsoft drop is not a horrible one. It is down about 7% this year, comparable to the Nasdaq. Rivals Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOG) are down slightly more for the period. However, each has wildly successful core businesses, an advantage over time. In the case of Alphabet, it is search giant Google. In the case of Amazon, it is its e-commerce juggernaut.
Microsoft was rewarded for its early considerable investment in the AI space. Last year, it invested $14 billion in AI leader OpenAI, which was supposed to be a cornerstone of a close association. The two now compete with one another. Microsoft objects to the business model of OpenAI’s critical ChatGPT flagship product.
Microsoft’s primary challenge is whether its AI business can best compete with major rivals Alphabet, Amazon, and Meta (NASDAQ: META). Each has said publicly it will invest tens of billions of dollars to grow its AI business. Among other applications, Microsoft plans to use AI to make its Azure cloud business more attractive to customers. However, cloud leader Amazon has started to do the same.
Among the largest concerns about commercial AI products is whether customers will pay for them. The AI sector has not been able to show that its products can generate great deals of revenue. Among the concerns is that many AI applications are free. And, as China’s DeepSeek has shown, critical software can be open source, making access to its core code base available to anyone.
Another hurdle Microsoft and AI rivals must overcome is the tremendous need for energy to operate AI service farms. Electricity generation capacity in the US is not set up today to provide that demand.
Microsoft’s lead in the AI industry is looking like it has disappeared.
The post Microsoft Stock Down Seven Weeks In A Row appeared first on 24/7 Wall St..
