Shares of Microsoft surged approximately 4% in early trading, reaching $408.27, as investor concerns over artificial intelligence competition eased following positive industry feedback. Despite the gain, the stock remains 27% below its all-time closing high of $542.07 recorded in October last year. The earlier decline was partly driven by fears that Microsoft's core software offerings could be disrupted by rapidly evolving AI technologies.
A survey by KeyBanc of value-added resellers indicated strong demand for Microsoft's AI, cloud, and cybersecurity products. Analyst Eric Heath noted that adoption of Microsoft's AI Copilot is accelerating, with nearly half of respondents having rolled it into production, a 14-point increase from the fourth quarter. The survey also revealed that 85% of respondents expect to increase spending on Microsoft's Azure cloud platform, marking the highest level in five quarters, which could alleviate investor concerns about Azure's growth relative to competitors like Google Cloud. KeyBanc maintained an Overweight rating on Microsoft with a $600 price target.
Concurrently, Microsoft is scaling its AI infrastructure by leasing additional data center capacity in Narvik, Norway, at a site originally intended for OpenAI. The facility, operated by neocloud provider Nscale, is inside the Arctic Circle. As part of the agreement, Microsoft will rent 30,000 additional AI chips based on Nvidia's Vera Rubin architecture, building on a prior $6.2 billion commitment at the same location. This site was previously marketed by OpenAI as part of its "Stargate Norway" initiative, linked to a broader $500 billion infrastructure push in the United States, though OpenAI has not finalized an agreement for capacity there. The shift follows OpenAI's pause of a similar Stargate project in the United Kingdom due to high energy costs and regulatory challenges.
In a related development, Nvidia shares edged lower by 0.4% to $198.08, showing signs of fatigue after an 11-day rally—its longest winning streak since at least 1999. The stock briefly traded above $200 on Wednesday but has struggled to sustain a decisive breakout above this key psychological level. The decline occurred despite strong earnings from key suppliers like Taiwan Semiconductor Manufacturing Company (TSMC), which reported a 58% jump in first-quarter profit, with high-performance computing (including AI chips for Nvidia) accounting for 61% of its revenue.
TSMC CEO CC Wei stated, "AI-related demand continues to be extremely robust," yet TSMC shares fell about 2% on Thursday, reflecting elevated investor expectations. Similarly, ASML shares declined despite solid results and raised guidance. Investors are now awaiting upcoming earnings from major technology firms for signals on sustained AI infrastructure spending and adoption of Nvidia's Blackwell architecture, which could determine whether Nvidia can break above $200 consistently.
