The Microsoft negativity on Wall Street continues to pile up ahead of earnings at the end of the month, and we’re struggling with the portfolio stock, too. Among the recent deluge of analyst reports and media coverage, troubling themes are emerging about Microsoft’s artificial intelligence spending and Azure cloud growth. Those two factors have Jim Cramer questioning whether Microsoft can pull its business and its stock out of the doldrums. In recent quarters, Jim has teetered back and forth on Microsoft. But during Wednesday’s April Monthly Meeting , he did not flatly rule out adding to the position at some point if conditions on the ground change. “Microsoft better get their act together,” Jim said during Thursday’s Morning Meeting, chiding the company for the perception that it is squandering its front-mover advantage on AI that goes back to late 2022. That was when the startup it was backing, OpenAI, exploded on the scene with ChatGPT. Often described as the “iPhone moment” for AI, the release of ChatGPT showed the general public what generative AI could really do. Jim views the AI race as a “winner take all, loser take none” situation and thinks Microsoft is not spending enough to keep up. Speculation about Microsoft’s capital expenditure budget is running rampant on reports about a slew of cancellations on AI data center leases, including a withdrawn contract with CoreWeave in early March that OpenAI is said to have later picked up. OpenAI can best be described of late as a “frienemy” of Microsoft. While partners and financially tied to Microsoft, OpenAI has increasingly been looking like it’s charting its own path. Microsoft had previously been the exclusive cloud provider to OpenAI, but the nature of that relationship changed in January . In a LinkedIn post earlier this month , Microsoft confirmed it was “slowing or pausing some early-stage projects,” but maintained that it still plans to spend about $80 billion this year on AI infrastructure. The company’s response followed a Bloomberg News report and others that said the tech giant was pulling back on data center projects around the world. On Tuesday, Bloomberg reported that the mayor of Heath, Ohio — where work was paused — caught the city officials by surprise. Capex levels have been a hot topic since DeepSeek rocked the AI trade on January 27. Claims at the time from the Chinese startup that it created a more efficient AI model led to worries that deep-pocketed tech giants would dial down spending. That didn’t happen in the near term as Microsoft and other Club names Meta Platforms and Amazon , only a few days later, all reiterated their commitments alongside quarterly earnings. Normally, a pullback in spending would be viewed as a positive for earnings and margins. However, when it comes to AI, Jim thinks that any spending let-up could knock Microsoft out of the conversation. “I now see Microsoft being the odd man out. I think OpenAI is going to break away from Microsoft and take ChatGPT with it,” Jim said, adding that he thinks “Microsoft Copilot is stalling.” Copilot is Microsoft’s AI assistant that’s offered in the company’s enterprise and consumer software customers. KeyBanc on Thursday downgraded Microsoft from an overweight buy and removed its price target. “We’re not tactically downgrading ahead of the print in a couple weeks due to any single response in our survey of checks; this is more about seeing the data building and validating some worries we’ve had for a while,” the analysts wrote. Among the price target cuts on Wall Street, Citi went to $480 per share from $497, citing concerns about Azure “at the lower end of the guide,” with further revenue growth deceleration in the future. On Wednesday, Jim cited Morgan Stanley’s Microsoft price target cut to $472 from $530. The analysts, who did maintain their overweight buy rating, were worried that Azure would miss the mark when the tech giant reports earnings on April 30. The analysts reduced growth expectations for the cloud unit. “We thought it might accelerate,” Jim said earlier this week. “The key to betting on why you want to be in the stock was [Azure] acceleration.” Morgan Stanley analysts highlighted that investor sentiment around Microsoft “remains negative” due to looming concerns over macro and microeconomic impact. They also pointed to slowing momentum in Copilot. Despite the short-term negative outlook, Morgan Stanley said, “Microsoft’s overall positioning remains strong and that shares may be nearing a valuation floor which drives an attractive long-term risk-reward.” MSFT YTD mountain Microsoft YTD Microsoft does have the dubious distinction of being the best-performing “Magnificent Seven” stock year to date, meaning not down as much as the others. Perhaps the stock only losing 12% in 2025’s terrible year for tech stocks is owed to Microsoft being seen as able to weather economic downturns, given how embedded its services and products are with companies and consumers around the globe. Worries about a recession have certainly been on the boil following President Donald Trump’s tariffs blitz, which seems to take a new twist every day. So, as we march toward earnings day, we’re keen for guidance from Microsoft on any tariff impact — but it’s what the company has to say about AI capex and cloud growth that matters most to us. (Jim Cramer’s Charitable Trust is long MSFT, META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Microsoft CEO Satya Nadella waves during an event celebrating the 50th Anniversary of Microsoft on April 4, 2025 in Redmond, Washington. The company also gave an update on Copilot, its AI tool.Â
Stephen Brashear | Getty Images News | Getty Images
The Microsoft negativity on Wall Street continues to pile up ahead of earnings at the end of the month, and we’re struggling with the portfolio stock, too.
