Generative AI advancements can help Microsoft bounce back from its recent losses, according to Guggenheim. Analyst John DiFucci upgraded the stock to neutral from sell, saying the "potential monetary benefit from Generative AI is too strong a force to contend with" despite the company's recent underperformance. The analyst removed his price target on the stock as he believes the stock is trading around a fair valuation. Microsoft has lost steam in recent months, down 6.
"While we believe that MSFT will be able to monetize GenAI, the massive monetization which appears to be a foregone conclusion for many investors carries material risk in our opinion, in both the size and timing of the benefit," DiFucci said. DiFucci noted PC shipments, which drive the Windows business, will no longer benefit from "resurging relevance" and were a Covid beneficiary like Zoom.