"Microsoft ( NASDAQ:MSFT) and Amazon ( NASDAQ:AMZN) reacted quite negatively after getting slapped with pretty significant downgrades earlier in the week, courtesy of Rothschild & Co. Redburn, which now holds "neutral" ratings rather than "buy ratings." As you'd expect, much of the reason behind the downgrade was due to high AI spend and uncertainty regarding the potential for profit. Undoubtedly, this is the narrative that's been in the driver's seat in recent weeks,"
"Though I respect Rothschild greatly, I must say there wasn't a ton of new information to warrant the vicious selling in the shares of Microsoft and Amazon. Either way, I'd view any additional selling pressure as more of an opportunity to buy than anything else. Microsoft and Amazon are spending heavily on AI. And there's a cloud of uncertainty surrounding what to expect in terms of future returns"
Rothschild & Co. Redburn downgraded Microsoft and Amazon from buy to neutral, prompting sharp share declines tied to concerns about extensive AI spending and unclear profit prospects. The downgrades contributed to a broader Nasdaq 100 drop of roughly 6%, intensifying AI bubble fears and market volatility. Similar prior AI-driven selloffs have occurred, and the recent price action appeared disproportionate to the amount of new information available. Both companies remain blue-chip leaders investing heavily in AI under experienced executives, but the timing and scale of returns from those investments remain uncertain.
Read at 24/7 Wall St.
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