Stifel reiterates Hold on Microsoft stock after AI product updates

Investing.com - Stifel reiterated a Hold rating on Microsoft (NASDAQ:MSFT) following the company’s product announcements at the NVIDIA GTC conference. The rating comes as the stock has declined 24.7% over the past six months, though 17 analysts have recently revised their earnings upwards for the upcoming period, according to InvestingPro data.

Microsoft announced Monday after market close the availability of NVIDIA Nemotron models on Microsoft Foundry, the rollout of the new Vera Rubin NVL72 supercomputer to its data centers, and an integration with NVIDIA Physical AI Data Factory Blueprint to support physical AI workflows.

Microsoft is the first hyperscaler to use the new Vera Rubin NVL72 supercomputers, with the rollout occurring over the next several months, according to the company’s blog.

Stifel expects the rollout of the new supercomputers to keep capital expenditure growth elevated, modeling fiscal 2027 capex of approximately $200 billion, representing roughly 40% growth and in line with Google’s updated approximately $180 billion estimate.

The availability of the new Nemotron models on Foundry highlights Microsoft’s commitment to supporting the widest selection of models, which currently stands at more than 11,000, Stifel said. Despite elevated capex expectations, InvestingPro analysis suggests Microsoft appears undervalued at current levels. For deeper insights, investors can access the comprehensive Pro Research Report, available for Microsoft and 1,400+ other US equities.

In other recent news, Microsoft reported a 15% increase in total revenue for the second fiscal quarter, driven by a 38% growth in Azure services, according to Evercore ISI. The firm maintained an Outperform rating for Microsoft, highlighting the potential of Azure despite concerns about capital expenditures and AI strategy. Additionally, Microsoft declared a quarterly dividend of $0.91 per share, payable on June 11, 2026. William Blair also reiterated an Outperform rating for Microsoft, following the announcement of new AI capabilities for its enterprise software platform, including updates to Microsoft 365 Copilot. These updates are part of Microsoft’s strategy to enhance its software offerings with advanced AI features. Meanwhile, Wolfe Research noted a sell-off in spatialomics stocks like Bruker Corporation and 10x Genomics after Microsoft unveiled its GigaTIME AI model, which raised concerns about the future demand for spatial proteomics. These developments reflect Microsoft’s ongoing focus on expanding its AI capabilities and its impact on related industries.

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