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Microsoft Pledges to Cover Data-Center Power as Analysts Trim Targets Before Earnings

Investor caution grows over AI costs, capacity limits, valuation risk.

Overview

  • TD Cowen cut its Microsoft price target to $625 from $655, kept a Buy rating, and said capacity constraints could keep shares range-bound despite checks showing stable to strengthening GPU and CPU demand.
  • Goldman Sachs maintained a $655 target and estimated that a 10% rise in power costs would reduce Microsoft’s free cash flow margin by 16 basis points.
  • Microsoft announced a Community-First AI Infrastructure policy that commits to paying data-center electricity and grid expansion costs and to limiting water use in coordination with local utilities.
  • Reuters reported Microsoft agreed to purchase a record 2.85 million soil carbon credits from Indigo Carbon, an estimated $171 million to $228 million deal tied to its 2030 carbon-negative goal.
  • Microsoft reports fiscal Q2 results on January 28, with Forbes noting a roughly 5% weekly stock decline as investors reassess near-term AI monetization and premium valuation.