Overview
- Rothschild & Co Redburn cut Amazon and Microsoft to Neutral and set 12‑month targets at $250 and $500, respectively.
- Shares fell on the day of the note, with Amazon down about 4% and Microsoft off roughly 2.7% during a broader tech pullback.
- The 61‑page analysis argues Gen‑AI is not comparable to cloud 1.0, citing 5–6 year depreciation vs. roughly 3 years previously, higher capital intensity, and weaker pricing power.
- The firm highlighted a higher risk of overbuilding AI infrastructure and said the market still prices in cloud‑era returns that it views as unattainable.
- For Amazon specifically, the downgrade pointed to AWS growth constraints despite recent reacceleration, even as many other analysts remain positive with a consensus target near $296.64.