① Reports indicate that Microsoft Some artificial intelligence settings have been downgraded. Despite a swift response from Microsoft on Wednesday regarding product sales growth targets, its stock price still ended in a decline; ② Growing market concerns about the AI narrative and a reassessment of Microsoft 's high valuation are also important reasons for the recent decline in Microsoft's stock price; ③ Analysts also pointed out that the large-scale commercial application of artificial intelligence products does indeed face many practical obstacles.
On Wednesday, news broke that Microsoft had lowered sales growth targets for some of its artificial intelligence products, causing the company's stock price to fall significantly in pre-market trading.
Microsoft swiftly responded on Wednesday, stating that the online media report inaccurately conflated growth with sales targets, demonstrating a lack of understanding of how sales organizations operate and their compensation systems. Microsoft emphasized that its overall sales targets for artificial intelligence products have not been lowered.
However, this response failed to reverse the decline, with Microsoft's stock still closing down 2.5% on Wednesday, indicating that investor sentiment has not fully recovered. The core reason for this situation lies in the contradiction between overly high expectations and the slower-than-expected pace of artificial intelligence applications, which has exacerbated market concerns about AI.
On Monday, OpenAI also shifted its business focus, pausing deployments in advertising and healthcare agencies to concentrate on improving customer satisfaction at ChatGPT. Previously, the company had also lowered its revenue forecast for AI products over the next five years by $26 billion.
Enterprise software companies like Salesforce and ServiceNow are offering significant discounts on their AI products to attract customers. These moves suggest that the large-scale commercial application of AI products still faces many practical obstacles, and that the AI industry is unlikely to achieve rapid profitability in the short term.
Stricter MarketAccording to previous reports from online media, several departments within Microsoft have reduced the quotas for sales staff to drive sales growth for certain AI products, citing the fact that many employees failed to meet sales targets in the fiscal year ending in June.
For example, Microsoft set a 50% sales growth target for a product called Foundry, but less than one-fifth of the sales staff in that department achieved the target. This is also considered one of the reasons why Microsoft lowered its fiscal year performance growth target in July.
Several analysts point out that businesses are still in the early stages of AI application and challenges are inevitable. Earlier this year, a study by MIT also found that only about 5% of AI projects are able to pass the current pilot phase.
The decline in Microsoft's stock price is not only due to the lowered sales targets weakening investors' confidence in the company's finances, but also largely reflects the market's growing concerns about the AI narrative and a reassessment of Microsoft's high valuation.
Microsoft is the world's second largest smartphone manufacturer after Nvidia. This became the second company to surpass a $4 trillion market capitalization, primarily due to investor optimism regarding artificial intelligence transactions. Microsoft's first fiscal quarter report in October showed that Azure cloud computing... The sector’s revenue grew by 40% from July to September, a key factor in determining market sentiment.
But after the initial excitement, the market regained its rationality, making the sluggish sales of AI products all the more glaring. However, DA Davidson analyst Gil Luria points out that this doesn't mean AI products lack the potential to help businesses improve productivity; it just might be more difficult than AI companies imagine.
(Article source: CLS)
