Microsoft stock receives rare downgrade as analyst says it's 'beholden' to Nvidia

Microsoft's AI lead is diminishing, and it is too reliant on Nvidia, say D.A Davidson analysts.

) received a rare Wall Street downgrade on Monday over concerns the tech giant's AI lead is diminishing while it has become too reliant on Nvidia .

Citing their own hyperscaler semiconductor data, the analysts at D.A Davidson said Microsoft is "beholden" to Nvidia, its supplier of AI chips. Microsoft pointed to a number of bright spots in its AI business, noting that AI contributed 8 percentage points of growth to its cloud Azure revenue, up from 7 percentage points in Q3 and 1 percentage point in Q4 last year.Despite Monday's downgrade, Microsoft shares were trading mostly flat. The stock, which topped in July, is up roughly 15% year-to-date.

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