Microsoft Corporation (NASDAQ:MSFT) is closely monitored by AI analysts. On November 18, Rothschild Redburn downgraded the stock to “Neutral” with a price target of $500 from $560. Azure drives over half of Microsoft’s revenue growth, but a two-fold challenge in AI economics raises concerns about long-term sustainability and cash flow potential.

The business is becoming more capital intensive due to the high cost of generating revenue from AI services. There is also potential value leakage within Microsoft’s Office 365 suite. While Microsoft remains a key player in the Gen-AI field, structural concerns led to the stock downgrade. Microsoft focuses on AI-powered cloud, productivity, and business solutions to enhance efficiency, security, and AI advancements.

Although Microsoft has potential, there are AI stocks with greater upside potential and less downside risk. For those seeking undervalued AI stocks, a free report on the best short-term AI stock is available. Check out “10 AI Stocks in the Spotlight This Week” and “10 AI Stocks Investors Are Watching” for more insights.

Read more at Yahoo Finance: Redburn Cuts PT and Downgrades to Neutral