Rothschild & Co Redburn Downgrades Amazon and Microsoft to Neutral on Generative AI Concerns

Rothschild & Co Redburn downgraded Amazon and Microsoft to neutral from buy rating, citing the high cost of developing generative AI and the overstated effect of AI on cloud-computing business growth. The firm previously maintained an "above-consensus bullish view" on the stocks. Analyst Alex Haissl said that the capital intensity needed to develop Gen-AI is nearly three times higher than cloud computing in its early days, and that prices would need to rise materially to make financial sense.