Microsoft Price Target Rises Amid AI Capital Expenditure Concerns

Microsoft's price target has been raised to $660 per share by Bernstein, who also maintained an Outperform rating for the company. According to Bernstein, Microsoft is taking a 'surprisingly measured approach' to building capacity, given strong demand signals and its ability to pivot facilities to meet demand.

This comes as AI capital expenditures surge to new heights at Microsoft, with concerns being raised about the tech giant's investment strategy in artificial intelligence. Aswath Damodaran, known as the 'Dean of Valuation', has expressed concerns that companies like Microsoft, Amazon, Meta, and Google are collectively overinvesting in AI without a clear business model.

Microsoft's stock has been on a three-day winning streak, adding approximately $67.42 billion to its market capitalization over this period. The company's Relative Strength Index (RSI) stands at 79.67, indicating overbought conditions. Microsoft's share price has risen by 32.19% in the past month, significantly outperforming the S&P 500.