MSFT: Price correction / Pull back this week?
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Sea of Thieves.
In the game "Sea of Thieves" the player assumes the role of a pirate who completes voyages for different trading companies.
Released by Microsoft Studios in 2018, the game originally an Xbox console exclusive when released, has since been ported to PlayStation in April 2024.
According to $Sony(SONY)$, "Sea of Thieves" was the most downloaded game for PlayStation 5 on the PS Store in May 2024, in the EU, US and Canada.
Fast forward to Washington. Microsoft President Brad Smith has been grilled by Congress about the pirates of the internet — hackers.
As reported by Reuters on Thu, 13 Jun 2024, a House homeland security panel has asked Smith about the tech giant's (a) security practices and (b) ties to China.
This comes about on the first anniversary after alleged China-linked hackers spied on federal emails by hacking into Microsoft's systems last summer and accessing 60,000 US State Department emails.
Separately, Russia-linked cybercriminals had also spied on Microsoft's senior staff emails this year, according to the Microsoft's disclosures.
Formidable Foes.
The congressional hearing comes amid increasing federal scrutiny over $Microsoft(MSFT)$ , the world's biggest software maker — also key vendor to the US government and national security establishment.
Microsoft's business accounts for around 3% of the US federal IT budget, Smith said at the hearing.
Lawmakers cited a report in April by the Cyber Safety Review Board — a group of experts formed by US Secretary of Homeland Security Alejandro Mayorkas — which slammed Microsoft for its lack of transparency over the China hack, calling it preventable.
The report found that the intrusion by Storm-0558, a hacking group assessed to be affiliated with China, was preventable.
What did Mr Brad Smith say:
Microsoft accepts responsibility for every finding in the CSRB report.
Microsoft had begun acting on most of the report's recommendations.
Microsoft’s business in China is to serve American interests by protecting the trade secrets of Microsoft’s American customers operating there and learning from what’s going on in the rest of the world.
Mr Smith also said Microsoft has categorically denied Chinese government requests to turn over sensitive information.
On hacking attacks, Mr Smith has stated that Microsoft are dealing with formidable foes in China, Russia, North Korea and Iran.
What is “worse” is, the hackers are getting better, more aggressive and more relentless in waging attacks at an extraordinary rate.
Other Reportings.
(1) Separately, a ProPublica investigation found that Microsoft has repeatedly rebuffed Andrew Harris, a company engineer, who beginning in 2017 had warned that a product flaw left millions of users vulnerable to attack, including federal employees.
Microsoft did not immediately respond to a request for comment.
(2) In addition, news reports earlier this month said (a) the Federal Trade Commission (FTC) and (b) the Department of Justice (DOJ) are set to open antitrust investigations into:
Microsoft.
OpenAI.
AI-chip kingpin $NVIDIA Corp(NVDA)$.
The aim is to examine the powerful companies’ influence on the artificial intelligence (AI) industry.
These issues come at a crucial time in Microsoft's history.
Microsoft’s AI Edge.
According to a report by The Wall Street Journal (WSJ), Microsoft CEO Satya Nadella is betting the software giant's future on the potential of artificial intelligence.
Microsoft has a multibillion investment in OpenAI, the creator of ChatGPT.
However, reportedly Nadella has been spreading his bets in an effort to turn the world’s biggest company into the world’s most aggressive amasser of AI talent, tools and technology.
Nadella has been hunting down new partners around the globe and has invested in a range of AI startups, including $1.5 billion into an Abu Dhabi-based firm in April 2024. (see below)
At the same time, WSJ also reported that Microsoft has begun building it’s in-house OpenAI competitor inside Microsoft, potentially putting it on a collision course with its most important partner.
The payoff could be substantial, with some analysts predicting that AI will create a $1 trillion+ market within a decade.
"We offer the most diverse selection of AI accelerators, including the latest from Nvidia, $Advanced Micro Devices(AMD)$ , as well as our own first-party silicon," Nadella told analysts during the company's third-quarter earnings call in April.
"Our AI innovation continues to build on our strategic partnership with OpenAI”.
More than 65% of the Fortune 500 now use Azure OpenAI service.
Tigress Financial, Analyst Ivan Feinseth, has:
Raised Microsoft’s price target to $550 from $475.
Affirmed a “Buy” on the shares, based on Microsoft’s AI involvement alone.
Strong conviction that Microsoft is "increasingly positioned to lead the AI revolution”, through ongoing integration of Generative AI functionality throughout its software stack and products.
Noted Microsoft's increased price target represents a potential return with dividends of more than 25% from current levels.
My viewpoints: (mine only)
The post (sharing herewith) was released on Sat, 15 Jun 2024.
It was supposed to be an overall “positive sentiments” post on Microsoft with an upwards stock price revision.
Yet there were many “red” flags raised on events that Microsoft is encountering in the immediate, near and future terms.
By the time the weekend is over, will a rain cloud form over Microsoft when it resumes trading on Mon, 17 Jun 2024 ?
With Microsoft President, Brad Smith’s confession - will the IT giant, be subjected to further scrutiny and punitive actions by US Homeland security panel?
Surprised that Congress did not probe further on Microsoft’s investment in Abu Dhabi based AI company G42 that is overseen by UAE’s national security adviser?
Is there no US national security concerns or will Congress realize it further down the road?
Eventually, Microsoft would also have to address the issue on why the company has
repeatedly rebuffed Andrew Harris, Microsoft’s engineer?
Mr Harris has (since early 2017), warned that Microsoft’s product flaws left millions of users vulnerable to attack, including federal employees.
Microsoft Technical Analysis.
As of Fri, 14 Jun 2024, Microsoft closing price is way above its moving averages of 200-days, 50-days and 20-days.
Preliminary gut feel is the stock has been overbought.
Yet, when it’s relative strength index (RSI) was examined, it was only “69”, clearly indicating that it is just shy of falling into “overbought / overvalued” territory.
Is it too “bold” a move by CEO Satya Nadella to position AI as Centre focus for Microsoft ? What if it fails to launch to stratospheric success?
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Do you think Microsoft will pull back this week, in preparation for the next climb.?
Do you think there will be “punishments” handed out to Microsoft, as a result of being aware and not plugging the vulnerabilities?
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Modify on 2024-06-26 22:11
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