Investor concerns about OpenAI have led to a notable decline in Microsoft (MSFT) stock, now over 20% off its peak. Despite artificial intelligence (AI) being a major growth driver in the stock market, worries arise from OpenAI’s significant financial challenges. Microsoft’s 27% stake in OpenAI is critical, as the partnership contributes approximately 45% to Azure’s order backlog. As OpenAI seeks to raise $100 billion and faces competition from companies like Anthropic and Alphabet, its performance impacts Microsoft’s cloud business directly.
However, amidst the uncertainty, Microsoft reported robust financials, with a 26% year-over-year increase in its cloud business, totaling $51.5 billion. Trading at its lowest valuation since late 2022 at 25 times earnings, the stock presents a compelling buying opportunity. Analysts forecast a 14-15% annual growth in earnings, making Microsoft a strategic AI investment. Buying now could yield significant returns as investor confidence in OpenAI stabilizes.
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