Microsoft stock downgraded by UBS amid concerns over Azure cloud unit growth

Yahoo Finance Live dispels the concerns of analysts at the Microsoft Azure cloud unit, also commenting on the technology company’s partnership with ChatGPT.

Video transcript

[AUDIO LOGO]

DAVE BRIGGS: My game is Microsoft. Stocks fall after UBS downgrades against cloud services and Office. UBS downgraded the stock to neutral from buy and lowered its price target by $50 to $250.

Analyst Karl Keirstead writes that the Microsoft Azure cloud unit, and I quote, is “entering a sharp slowdown in growth that could turn out worse in fiscal years 23-24 than investors are modeling,” the closing quote. They added that the market could reach saturation.

Now, on the bright side of the information, the information actually says that Microsoft plans to launch a version of Bing that uses GPT chat to answer search queries in order to make Bing more competitive with Google. Clearly, investors don’t believe that’s going to happen if we look at what happened to stocks.

Microsoft lost 29% of its value last year. And stocks are down more than 5%. Apparently, investors don’t think Bing will be a competitor to Google. You know my thoughts on this. I’m on Yahoo Finance Island. I think Chat GPT will change the way we live and work, Sean.

SEANA SMITH: Yes, I don’t know if I’ll go that far. I wonder what will happen to him. I’m still… I have a lot of questions. I don’t think Bing…maybe that makes him a little less competitive…

DAVE BRIGGS: I don’t think Bing knows how to compete with Google.

No.

DAVE BRIGGS: Bing is a mess.

SEANA SMITH: I know. Bing is a failure.

Review the note.

SEANA SMITH: But maybe that makes it a little more competitive when you put it against Google. But Microsoft, it’s really interesting to look at the downturn we’ve certainly seen in these stocks. Dave, you mentioned a 29% cut in 2022.

Wall Street, however, is quite optimistic despite this downgrade. 90% of analysts looking at Microsoft today actually have a buy recommendation on the stock. There are no sales ratings. Maybe a lot of that has to do with pricing.

However, I was surprised that a significant part is optimistic about Microsoft, given the current technological situation, higher rates, what this means for many of these companies.

DAVE BRIGGS: It’s GPT chat.

And the cloud too.

SEANA SMITH: GPT chat. [LAUGHS] Everyone listens to you.

DAVE BRIGGS: It’s clearly GPT Chat.

SEANA SMITH: You are very optimistic in GPT chat, that’s all you need to know.

I just want to be a kid – I just want to be a high school kid with GPT chat now available. I just… I’ll throw it out there.

DAVE BRIGGS: This is one of the greatest stories in this country…

I love it.

DAVE BRIGGS: How will teachers control it?

SEANA SMITH: Yes, it goes…

DAVE BRIGGS: No idea.

SEANA SMITH: – be tough

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