Microsoft downgraded to Sector Weight from Overweight at KeyBanc

KeyBanc analyst Jackson Ader downgraded Microsoft (MSFT) to Sector Weight from Overweight without a price target The firm’s Microsoft-specific reseller survey results were “soft” with the company’s strategic importance dropping 4 points quarter-over-quarter, while its conversations have been largely mixed with increased focus around artificial intelligence monetization and capex flexibility. Long-term expectations for workloads to be deployed in the cloud were a negative read, now at 48% from 56% in a Q$ survey, the analyst tells investors in a research note. With the recent degradation in cloud deployment expectations and near-term spend, KeyBanc came away from the survey more cautious on Microsoft shares. It cut estimates and downgraded the shares. Large capex expectations with limited one-year out flexibility may put pressure on the company’s margins in the short term and over-index stock performance to the Azure business in a potentially worsening macro backdrop, contends KeyBanc.