Microsoft hiccup is the latest sign of AI anxiety
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Illustration: Sarah Grillo/Axios
A report that Microsoft lowered its ambitious growth targets was enough to take billions of dollars out of the tech sector on Monday before the company denied the report.
Why it matters: The knee-jerk selloff is indicative of how quick the market is to react to doubts over the AI trade right now.
The big picture: Microsoft is one of the main players in AI, and any hint that demand for the technology may be ebbing feeds into a broader nervousness about a bubble. Those jitters have been seen in the shares of other AI players this fall.
- Meta, which teased increased spending and issued debt after its latest earnings, caused some investors to doubt its AI capital spending plans.
- Oracle has taken on the highest amount of debt among large hyperscalers.
- Nvidia, which delivered remarkably robust earnings results for the third quarter, was still not enough to put concerns about an AI bubble to rest.
What they're saying: When it comes to the AI trade, "it's a lot of fun to figure out why this might fail," Daniel Newman, CEO and technology analyst at the Futurum Group, a research and advisory firm, tells Axios.
- Artificial intelligence is not being deployed and adopted "as quickly in some cases" as investors might want, he says. "This stuff is hard."
Zoom in: The Information reported Wednesday that Microsoft reduced sales growth targets for certain AI software offerings.
Zoom out: "Aggregate sales quotas for AI products have not been lowered, as we informed them prior to publication," a Microsoft spokesperson tells Axios.
💠Thought bubble: At a recent Axios event with over a dozen of my sources, everyone at the table agreed that clients are as worried about their children being able to get jobs amid the AI expansion as they are about a bubble.
- Newman thinks that a broader fear is part of what is driving the AI bubble concerns: It's not about the market. It's about an "unconscious bias" toward the technology.
