Tech giant Microsoft (MSFT) has been working for years to build its own AI chips to reduce its dependence on Nvidia (NVDA), but the project hasn’t gone as planned. Indeed, according to The Information, its next big chip, called Braga, has been delayed from 2025 to 2026 because of design changes, limited staffing, and high employee turnover. Furthermore, when it finally does launch, it’s expected to perform worse and be less energy-efficient than Nvidia’s top Blackwell chip, which came out in late 2024. It’s worth noting that Microsoft’s first chip, Maia 100, was introduced in 2023 but is only used for internal testing, as it was originally designed for image processing in 2019, not AI.
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To stay competitive, Microsoft had rolled out a plan for three next-generation chips—Braga, Braga-R, and Clea—that were scheduled for release between 2025 and 2027. But now, with Braga delayed, there’s concern that the company may not meet its own schedule. These chips are specifically designed for inference, which is the process AI models use to make decisions. Microsoft had plans to design a chip for training AI models, but dropped that idea in early 2024. Braga’s delay got worse when OpenAI asked for added features that made the chip unstable during testing. This caused further delays and led to high stress and turnover. In fact, up to 20% of some teams left.
Meanwhile, other tech giants are making more progress with their custom AI chips. Amazon (AMZN) is preparing to launch its third-generation Trainium 3 chip by the end of the year, and claims it will be twice as powerful as its previous version. Google (GOOGL), which has spent nearly a decade developing its TPU (Tensor Processing Unit) chips, doesn’t rely on Nvidia to train most of its AI models. In addition, its upcoming chip, Ironwood, will start limited production later this year and go into full production in 2026. However, even Google hit a setback when key engineers from its chip partner MediaTek left to join Nvidia.
Is MSFT Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 30 Buys and five Holds assigned in the last three months. Furthermore, the average MSFT price target of $521.41 per share implies 4.6% upside potential.
