Major technology firms, including Microsoft (NASDAQ:MSFT), face a crucial challenge highlighted by UBS: a shortage of GPUs, particularly those from Nvidia (NASDAQ:NVDA). This could impede their efforts to maximize AI-generated revenue in the coming year. According to analyst Karl Keirstead, the issue goes beyond the recognized potential of AI to generate revenue. The key question is whether industry leaders will be able to obtain enough GPUs to fully utilize AI’s capabilities.
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Microsoft has $50B allocated for fiscal 2024, which is indicative of a large AI infrastructural expansion. Yet, tangible effects of the GPU supply deficit are emerging, with Keirstead referencing the recent earnings report from Super Micro Computer as an illustrative case. He asserts, “Despite Nvidia’s endeavors to ameliorate supply chain challenges, it remains an undeniable risk for Microsoft. This isn’t a speculative ‘black swan’ scenario; the reality of GPU supply constraints is pressing and immediate.”
Despite his warning, Keirstead has a Buy rating on MSFT stock with a $400 price target, which equates to an upside potential of approximately 22% from current levels. Furthermore, investors don’t appear to be too worried about potential shortages as shares are higher at the time of writing.
Is MSFT Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 32 Buys, two Holds, and one Sell assigned in the past three months, as indicated by the graphic above. In addition, the average price target of $391.52 per share implies 19.21% upside potential.
