Analyst: Microsoft Deserves Google's AI Crown After Pendulum Swung Too Far

Microsoft shares slipped 1.08% to $368.93 on Monday, a day after an analyst argued the company deserves Google's AI crown. The call comes amid what the analyst described as AI valuation dislocations across tech, particularly between memory and CPU stocks and between Microsoft and Google-owner Alphabet and Amazon.

"The pendulum swung too far," the analyst said, making the case that Microsoft is better positioned than Google to capture the next phase of AI adoption. Microsoft has invested heavily in OpenAI and integrated AI into its productivity suite, while Google has faced questions about the pace of AI monetization. The analyst's view pushes back against the market's recent tilt toward Google's AI narrative.

AlphaScala's proprietary Alpha Score rates MSFT at 42 out of 100, a Mixed rating, reflecting a balanced risk-reward profile at current levels. The score captures a stock with average momentum and mixed sentiment; the analyst's call could shift that balance if the market re-evaluates the AI pecking order.

The analyst's reference to memory vs CPU likely points to divergent pricing within AI hardware–memory makers like Micron versus CPU-centric semi firms–and the relative valuation of major cloud providers. Microsoft and Amazon have seen their AI premiums compress after a strong run in 2023 and early 2024, while Alphabet's shares have rallied on its own AI model updates. A re-rating could re-open the gap.

The thesis gains weight if Microsoft's next earnings report shows faster AI revenue growth or if Azure cloud unit growth accelerates. It would weaken if Google or Amazon demonstrate stronger AI-driven cloud momentum. For now, the stock has not budged on the call, holding near Friday's close. The next concrete catalyst for MSFT is its quarterly report, expected in late July.