Microsoft slows AI spending

Article Excerpt

MICROSOFT CORP. $374 is a buy for aggressive investors. The world’s largest computer software maker (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 7.4 billion; Market cap: $2.8 trillion; Price-to-sales ratio: 10.5; Dividend yield: 0.9%; TSINetwork Rating: Above Average; www.microsoft.com) announced plans to spend $80 billion on new datacentres in its 2025 fiscal year ending June 30, 2025. The 2025 spending is also 60% more than its fiscal 2024 outlays of $50 billion. These new facilities will support growing demand for applications powered by artificial intelligence tools. They will also help attract more customers to Microsoft’s Azure cloud computing platform. However, Microsoft has now paused its $1 billion proposal to build datacentres in three Ohio towns due to the new U.S. tariffs on steel, aluminum and other imports. Even so, the company remains in a strong position to profit from rising AI demand. For fiscal 2025, its earnings will likely rise about 12% to $13.16 a share. The stock trades at 28.4…