Following the tech giant's denial of recent rumors that it has reduced sales quotas for its artificial intelligence (AI) products, Microsoft's (MSFT) stock is slowly rising on Thursday morning. Earlier this week.
The Information stated that Microsoft's new AI software solutions were encountering pushback from its clients; however, on December 4, the corporation rejected these claims as baseless speculations.
As of this writing, Microsoft's stock has down more than 10% from its late October peak for the year. D.A. Davidson analysts reaffirmed their "Buy" rating for the Nasdaq-listed company in response to Microsoft's update.
As it continues to provide the "best AI exposure" until 2026, the investment group predicts that MSFT stock will reach $650 next year, a 35% increase from present levels.
The ChatGPT company's infrastructure and cloud expenditures will continue to flow significantly through Azure, according to its research note, and the latest OpenAI fears are exaggerated. Regardless of whether artificial intelligence is a bubble or not, D.A. Davidson informed clients on Thursday that Microsoft is still a fundamental long-term investment.
Analysts at D.A. Davidson are still optimistic about Microsoft shares because the Redmond-based company is well-positioned to continue being "the fastest growing hyperscaler" in 2026. OpenAI's most recent models are available to Microsoft for free for seven years. In the meantime, it has begun to diversify its bets in artificial intelligence, including a substantial investment in Anthropic.
The investment firm came to the conclusion that this will enable the behemoth continue to be an AI winner in the long run. It's also important to note that Microsoft is presently trading at roughly 30x forecast earnings, making it far less expensive to own than other leading AI stocks like Nvidia (NVDA), which is currently trading at over 41.
The fact that D.A. Davidson is not the only Wall Street firm advising investors to continue with Microsoft stock through 2026 may also give investors hope.
Barchart reports that the consensus rating for Microsoft is currently "Strong Buy," with price targets as high as $700, suggesting that the company's stock is not yet out of steam.
