Caixin.com reported on September 24th (Editor: Xiaoxiang) $Microsoft (MSFT.US)$ Unusually, it was downgraded by a Wall Street institution on Monday, due to concerns that this technology giant's leading edge in the field of artificial intelligence is weakening, and it is overly dependent on Nvidia in terms of artificial intelligence infrastructure.

According to the latest report, analyst from financial services company D.A. Davidson has currently downgraded Microsoft's stock rating from 'buy' to 'neutral', but still maintains its target price at $475 — indicating a potential upside of around 8% from the current level.

D.A. Davidson's Managing Director, Gil Luria, pointed out on Monday that Microsoft's early investments in AI and the launch of commercial products initially gave the company an advantage over Amazon and Google, both of which were caught off guard at the time.

However, Luria stated, 'Since then, Amazon and Google have begun heavily investing to catch up with Microsoft.'

'Looking ahead, we believe that Amazon's AWS and Google Cloud Platform (GCP) actually have an advantage over Microsoft's Azure, as they are able to deploy their self-developed chips in their own data centers, with the cost of these chips only being a small fraction of NVIDIA GPUs. In comparison, Microsoft has not yet achieved this on its own chips,' Luria pointed out.

Analysts from D.A. Davidson company cited their research data on the semiconductor market, stating that Microsoft has 'over-relied' on NVIDIA, its AI chip supplier.

"Microsoft's dependence on Nvidia is so high that it's almost like transferring wealth from its own shareholders to Nvidia's shareholders," Luria said.

Of course, Microsoft itself may not be unaware of this.

As industry journalist Dan Howley recently reported, Microsoft has begun a broad push to inject AI capabilities into its vast portfolio of business software products, aiming to widen the gap with competitors in this area and find ways to monetize its huge investments in AI technology. The company has also been pouring money into building AI datacenters, with capital expenditures in the latest quarter reaching as high as $19 billion, a 35% increase from the previous quarter.

In its latest financial report released at the end of July, Microsoft also mentioned some highlights of its AI business, pointing out that AI contributed an 8 percentage point growth in revenue for its Azure business, higher than the 7 percentage points in the third quarter of last year and 1 percentage point in the fourth quarter. However, the company's outlook for the growth rate of Azure business revenue in the first quarter of the 2025 fiscal year did not meet analyst expectations.

Microsoft's Chief Financial Officer, Amy Hood, at the time stated that excluding the impact of exchange rate movements, the year-on-year revenue growth rate for the Azure business is expected to be between 28% and 29%, a forecast lower than the analysts' average expectation of 30.6%.

Following D.A. Davidson's downgrade of Microsoft's rating, Microsoft's stock price closed nearly flat on Monday. Microsoft's stock price hit a historical high of $467.51 in July, but in the past two months, despite the overall stock market setting new records, its performance has been relatively lackluster. Year-to-date, Microsoft has seen an increase of about 15%, placing it in a relatively weaker position among the big seven tech companies.

Editor/Somer