Downgrade Caution for Amazon and Microsoft Amid AI Spending Uncertainty

2 months ago

Denita Sikova

"We're talking about Microsoft and Amazon. Yeah, just one day before Nvidia's earnings, we're seeing Microsoft down 2.7% and Amazon down more than 4%. The ticker is AMZN. Uh, of course, it comes part of it was a downgrade. Uh, we saw the rating cut from buy to neutral. This is of course happening at Redburn. Uh, and we saw quite a reaction there. We saw a lot of announcements about more AI spending later in the day and Microsoft was uh one of the companies that announced to invest up to 5 billion in an entropic but we're seeing concern building up obviously NASDAQ has been down for September they've raised around 1.8 eight trillion of value since mid-occtober. Uh so clearly AI spending there is a lot of worry there. What we're seeing here is that the company is saying the bookcase for generative AI is no longer clear and hyperscare should be approached with caution. It's a pretty harsh warning. They say the industry geni narrative looks increasingly misplaced. Uh it's very rare to place a neutral rating on Microsoft and Amazon and 90% is a buy."

The segment highlights a significant downgrade for hyperscale names, including Amazon (AMZN), from buy to neutral amid concerns over ambiguous generative AI prospects and increased AI spending. This commentary suggests caution as the prevailing bullish narrative is questioned.

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