DeepSeek AI Fears Haunt Meta, Microsoft Earnings. What Stock Markets Need to See and 5 Other Things to Know Today.
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 29 2025
0mins
Should l Buy MSFT?
Source: Barron's
Technology Stocks and Market Reactions: Following concerns over low-cost AI models from DeepSeek, technology stocks are experiencing renewed interest, driven by positive reports from ASML regarding chip-making orders, although investors remain cautious about the long-term implications of these developments.
Corporate Earnings and Unionization Efforts: Starbucks reported better-than-expected earnings despite a decline in same-store sales, while Whole Foods workers voted to unionize for better pay and benefits, marking a significant labor movement within the Amazon-owned company.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 422.790
Low
500.00
Averages
631.36
High
678.00
Current: 422.790
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company. The Company develops and supports software, services, devices, and solutions. The Company’s segments include Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services. This segment primarily comprises: Office Commercial, Office Consumer, LinkedIn, and Dynamics business solutions. The Intelligent Cloud segment consists of server products and cloud services, including Azure and other cloud services, SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs), and Nuance and GitHub; and Enterprise Services, including enterprise support services, industry solutions and Nuance professional services. The More Personal Computing segment primarily comprises Windows, Devices, Gaming, and search and news advertising.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Microsoft Stock Down 22% Faces Challenges Ahead of Earnings
- Cloud Backlog Concerns: Microsoft has a staggering $625 billion cloud order backlog, with $281 billion attributed to OpenAI, which has reduced its computing capacity spending forecast, leading to decreased market confidence in the backlog and potential revenue growth.
- Upcoming Earnings Report: Microsoft is set to release its fiscal 2026 Q3 earnings on April 29, with investors eager for updates on AI products like Copilot and the Azure cloud platform to assess market performance and growth potential.
- Copilot Adoption Surge: As of December 31, Copilot licenses sold for enterprise 365 reached 15 million, representing a modest 3.7% penetration but showing a robust 160% year-over-year growth, indicating strong market demand and future growth potential.
- Valuation Appeal: With a current P/E ratio of 26.4, below its five-year average of 32.9, Microsoft stock appears undervalued, and if the earnings report alleviates backlog concerns, the stock could rebound significantly, offering substantial returns for investors.
See More
Market's Muted Response to Middle East Tensions
- Market Stability: Despite Iran's closure of the Strait of Hormuz causing a more than 5% spike in West Texas Intermediate crude oil prices, the Dow Jones Industrial Average only fell by 4.87 points, indicating a reduced investor focus on geopolitical tensions.
- Bond Market Influence: Cramer noted that the stock market is more responsive to the bond market, as interest rates remained unchanged despite rising oil prices, suggesting a diminished expectation for inflation surges and anticipation of rate cuts.
- Corporate Earnings Support: Strong results from companies like Cleveland-Cliffs indicate a healthy manufacturing backdrop, with the CEO reporting a full order book and increasing steel bookings from automotive OEMs, highlighting steady demand amid broader uncertainties.
- AI Revolution Driving Market: Cramer emphasized that the ongoing AI revolution is a key market driver, unaffected by geopolitical issues, involving a broad ecosystem of companies from Nvidia to Microsoft, suggesting robust market momentum.
See More
Market Unfazed by Iran Tensions, Cramer Explains
- Market Resilience: Despite Iran's closure of the Strait of Hormuz and a more than 5% spike in West Texas Intermediate crude prices, the Dow Jones Industrial Average only fell by 4.87 points, indicating a market largely indifferent to geopolitical tensions and focused on larger economic forces.
- Bond Market Influence: Cramer emphasized that the bond market is the true driver of stocks, noting that interest rates remained unchanged even as oil prices rose, suggesting that investors are not bracing for inflation surges and are anticipating rate cuts in the near future.
- Diminished Economic Impact: Cramer pointed out that the economic impact of rising oil prices may be less significant than in the past, as improved fuel efficiency and reliance on cheaper domestic natural gas could lead to lower utility bills, alleviating pressure on the broader market.
- AI Revolution Driving Growth: Cramer highlighted that the market continues to be propelled by the AI revolution, with companies like Nvidia and Microsoft benefiting from this trend, indicating that technological advancements are driving economic growth even amidst geopolitical uncertainties.
See More
Amazon to Invest $25 Billion in Anthropic for AI Infrastructure
- Investment Expansion: Amazon has agreed to invest up to $25 billion in Anthropic, building on the previous $8 billion, which underscores its ambition in the AI infrastructure sector.
- Long-Term Commitment: Anthropic has committed to spending over $100 billion on Amazon Web Services technologies over the next decade, indicating a deepening reliance on AWS Trainium chips for its operations.
- Infrastructure Expansion: Anthropic plans to bring nearly 1 gigawatt of Trainium2 and Trainium3 capacity online by the end of the year to address the rising demand from enterprises and consumers, thereby enhancing the reliability and performance of its Claude AI models.
- Intensifying Market Competition: Amazon's investment comes shortly after its $50 billion commitment to OpenAI, highlighting the escalating competition in the AI space, especially as both Anthropic and OpenAI vie for investor attention ahead of potential IPOs.
See More
Amazon to Invest Up to $25 Billion in Anthropic AI Expansion
- Investment Expansion: Amazon has announced an investment of up to $25 billion in AI startup Anthropic, in addition to the previous $8 billion, aimed at accelerating the development of AI infrastructure and further solidifying its market position in the AI sector.
- Long-term Commitment: Anthropic has committed to spending over $100 billion on Amazon Web Services over the next decade, indicating significant progress in their collaboration on custom silicon technology, which is expected to enhance the training and deployment capabilities of its Claude AI models.
- Infrastructure Expansion: Anthropic plans to bring nearly 1 gigawatt of Trainium2 and Trainium3 capacity online by the end of the year to meet the surging demand from enterprises and developers for Claude, ensuring the reliability and performance of its services.
- Intensifying Market Competition: Amazon's investment comes shortly after its agreement to invest up to $50 billion in OpenAI, highlighting the intensifying competition in the AI space, particularly as both Anthropic and OpenAI vie for investor attention ahead of potential IPOs.
See More
Google Partners with Marvell for AI Chip Development
- Stock Surge: Marvell Technology's shares rose nearly 6% on Monday, driven by reports that Google plans to utilize the chip designer for two new chips aimed at powering artificial intelligence workloads, reflecting strong market expectations for AI chip demand.
- Competitive Landscape Shift: Previously reliant on rival Broadcom for its in-house Tensor Processing Units (TPUs), Google's potential shift to Marvell could alter the competitive dynamics in the AI chip market, leading to a nearly 2% drop in Broadcom's stock.
- Surging Market Demand: As tech giants increasingly design in-house accelerators to meet AI demands, the roles of Marvell and Broadcom have become crucial, particularly amid a global semiconductor shortage, with Marvell's stock rising over 20% in March and nearly 50% in April.
- Prospective Technical Collaboration: The potential partnership between Google and Marvell may involve both TPUs and memory processing units, which not only aids Google in diversifying its AI technology but could also further solidify Marvell's position in the AI chip market.
See More
Microsoft Stock Down 22% Faces Challenges Ahead of Earnings
- Cloud Backlog Concerns: Microsoft has a staggering $625 billion cloud order backlog, with $281 billion attributed to OpenAI, which has reduced its computing capacity spending forecast, leading to decreased market confidence in the backlog and potential revenue growth.
- Upcoming Earnings Report: Microsoft is set to release its fiscal 2026 Q3 earnings on April 29, with investors eager for updates on AI products like Copilot and the Azure cloud platform to assess market performance and growth potential.
- Copilot Adoption Surge: As of December 31, Copilot licenses sold for enterprise 365 reached 15 million, representing a modest 3.7% penetration but showing a robust 160% year-over-year growth, indicating strong market demand and future growth potential.
- Valuation Appeal: With a current P/E ratio of 26.4, below its five-year average of 32.9, Microsoft stock appears undervalued, and if the earnings report alleviates backlog concerns, the stock could rebound significantly, offering substantial returns for investors.
See More
Market's Muted Response to Middle East Tensions
- Market Stability: Despite Iran's closure of the Strait of Hormuz causing a more than 5% spike in West Texas Intermediate crude oil prices, the Dow Jones Industrial Average only fell by 4.87 points, indicating a reduced investor focus on geopolitical tensions.
- Bond Market Influence: Cramer noted that the stock market is more responsive to the bond market, as interest rates remained unchanged despite rising oil prices, suggesting a diminished expectation for inflation surges and anticipation of rate cuts.
- Corporate Earnings Support: Strong results from companies like Cleveland-Cliffs indicate a healthy manufacturing backdrop, with the CEO reporting a full order book and increasing steel bookings from automotive OEMs, highlighting steady demand amid broader uncertainties.
- AI Revolution Driving Market: Cramer emphasized that the ongoing AI revolution is a key market driver, unaffected by geopolitical issues, involving a broad ecosystem of companies from Nvidia to Microsoft, suggesting robust market momentum.
See More
Market Unfazed by Iran Tensions, Cramer Explains
- Market Resilience: Despite Iran's closure of the Strait of Hormuz and a more than 5% spike in West Texas Intermediate crude prices, the Dow Jones Industrial Average only fell by 4.87 points, indicating a market largely indifferent to geopolitical tensions and focused on larger economic forces.
- Bond Market Influence: Cramer emphasized that the bond market is the true driver of stocks, noting that interest rates remained unchanged even as oil prices rose, suggesting that investors are not bracing for inflation surges and are anticipating rate cuts in the near future.
- Diminished Economic Impact: Cramer pointed out that the economic impact of rising oil prices may be less significant than in the past, as improved fuel efficiency and reliance on cheaper domestic natural gas could lead to lower utility bills, alleviating pressure on the broader market.
- AI Revolution Driving Growth: Cramer highlighted that the market continues to be propelled by the AI revolution, with companies like Nvidia and Microsoft benefiting from this trend, indicating that technological advancements are driving economic growth even amidst geopolitical uncertainties.
See More
Amazon to Invest $25 Billion in Anthropic for AI Infrastructure
- Investment Expansion: Amazon has agreed to invest up to $25 billion in Anthropic, building on the previous $8 billion, which underscores its ambition in the AI infrastructure sector.
- Long-Term Commitment: Anthropic has committed to spending over $100 billion on Amazon Web Services technologies over the next decade, indicating a deepening reliance on AWS Trainium chips for its operations.
- Infrastructure Expansion: Anthropic plans to bring nearly 1 gigawatt of Trainium2 and Trainium3 capacity online by the end of the year to address the rising demand from enterprises and consumers, thereby enhancing the reliability and performance of its Claude AI models.
- Intensifying Market Competition: Amazon's investment comes shortly after its $50 billion commitment to OpenAI, highlighting the escalating competition in the AI space, especially as both Anthropic and OpenAI vie for investor attention ahead of potential IPOs.
See More
Amazon to Invest Up to $25 Billion in Anthropic AI Expansion
- Investment Expansion: Amazon has announced an investment of up to $25 billion in AI startup Anthropic, in addition to the previous $8 billion, aimed at accelerating the development of AI infrastructure and further solidifying its market position in the AI sector.
- Long-term Commitment: Anthropic has committed to spending over $100 billion on Amazon Web Services over the next decade, indicating significant progress in their collaboration on custom silicon technology, which is expected to enhance the training and deployment capabilities of its Claude AI models.
- Infrastructure Expansion: Anthropic plans to bring nearly 1 gigawatt of Trainium2 and Trainium3 capacity online by the end of the year to meet the surging demand from enterprises and developers for Claude, ensuring the reliability and performance of its services.
- Intensifying Market Competition: Amazon's investment comes shortly after its agreement to invest up to $50 billion in OpenAI, highlighting the intensifying competition in the AI space, particularly as both Anthropic and OpenAI vie for investor attention ahead of potential IPOs.
See More
Google Partners with Marvell for AI Chip Development
- Stock Surge: Marvell Technology's shares rose nearly 6% on Monday, driven by reports that Google plans to utilize the chip designer for two new chips aimed at powering artificial intelligence workloads, reflecting strong market expectations for AI chip demand.
- Competitive Landscape Shift: Previously reliant on rival Broadcom for its in-house Tensor Processing Units (TPUs), Google's potential shift to Marvell could alter the competitive dynamics in the AI chip market, leading to a nearly 2% drop in Broadcom's stock.
- Surging Market Demand: As tech giants increasingly design in-house accelerators to meet AI demands, the roles of Marvell and Broadcom have become crucial, particularly amid a global semiconductor shortage, with Marvell's stock rising over 20% in March and nearly 50% in April.
- Prospective Technical Collaboration: The potential partnership between Google and Marvell may involve both TPUs and memory processing units, which not only aids Google in diversifying its AI technology but could also further solidify Marvell's position in the AI chip market.
See More
