From Nasdaq: 2024-11-14 04:45:00

Artificial intelligence (AI) has boosted tech companies like Microsoft (NASDAQ: MSFT), leading to a $3.1 trillion market cap. However, Microsoft’s profit growth is slowing, with earnings up by 11% in the last quarter. Concerns arise about the effectiveness of AI products like Copilot, potentially impacting Microsoft’s stock price.

Investors should be cautious about Microsoft’s stock trading at 35 times its earnings. Gartner predicts that 30% of AI projects may be abandoned next year. With a possible recession looming, AI investments could face cutbacks. Microsoft’s stock, up only 11% year-to-date, may struggle with slowing growth rates in the future.

Despite potential challenges, Microsoft remains a strong long-term investment with diverse segments like gaming and cloud computing. However, the stock’s high valuation suggests a possible correction. Investors should consider the risks before investing in Microsoft, as there may not be much margin of safety at present.



Read more at Nasdaq: Microsoft’s Latest Earnings Highlight a Concerning Trend for the Stock