In a rather shocking development for the company, Microsoft (MSFT) could be set to record its slowest quarter growth in 2024 amid emerging AI struggles. Indeed, investors have reported concerns with demand for artificial intelligence products as the company has continued investing in their development.
AI has ruled the stock market for much of the last year. As Nvidia (NVDA) has dominated in terms of growth, companies are all vying for market share. However, that could come with a cost for one of the largest software developers in the United States.
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Microsoft Facing Underwhelming Quarterly Earnings? Why Investors are Concerned
There are few companies with the kind of potential that Microsoft has. Despite its reputation and undeniable value, there is still so much to be gained. The company has boosted investment in Azure, its cloud-computing platform, and its AI capabilities.
These developments led Investors Business Daily analysts to project the company to sport the highest market cap over the next 12 months, reaching $3.71 trillion. Moreover, they predicted the company would surpass both Nvidia and Apple (APPL) to dominate in 2025.
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Yet, those expectations could prove to be more difficult to realize now. Indeed, a Reuters report states that Microsoft is facing its slowest quarterly growth in a year amid growing AI concerns. Specifically, “investors await signs of AI demand amid growing worries about the slow payoff from hefty investments in the technology.”
Since OpenAI’s ChatGPT launched last year, the tech sector has embraced an AI arms race. Companies like Meta (META) and Intel (INTC) have sought to compete with some of the heaviest hitters. Microsoft, investing in OpenAI, was viewed by many as firmly seated in the leaderhouse.
Yet, now the company investors are reportedly facing a “wall of worry” regarding MSFTs earnings. Specifically, one Morgan Stanley analyst said there is little “evidence on AI returns,” amid a boost in investments. There is a lot riding on the company’s quarterly earnings set to arrive Wednesday.