Microsoft's credit rating downgraded twice within a week, Melius warns about risks related to artificial intelligence.

Due to increasing concerns on Wall Street about the disruptive risks that artificial intelligence may bring to software stocks, Microsoft's stock rating has been downgraded for the second time in less than a week. Melius Research downgraded the stock from "buy" to "hold" on Monday, citing concerns about capital expenditures and Microsoft's Copilot brand product. Copilot is the main platform through which Microsoft sells AI software tools to office workers. Last week, Stifel also issued a similar rating downgrade, warning about the growth rate of Microsoft's Azure cloud computing business. Melius analyst Ben Reitzes wrote, "With products like Cowork introduced by Anthropic, Microsoft's powerful 365 software may face challenges, and they may even have to offer Copilot for free in order to maintain competitiveness, which would harm the growth and profit margins of its most lucrative 'productivity' division, consume internal capacity of Azure, and constrain the business from exceeding expectations."