Amazon and Microsoft’s AI megabets hit a wall — Wall Street’s rare bear makes his move

In a rare shift of tone from Wall Street, analyst Rothschild & Co Redburn has downgraded both Amazon and Microsoft, signalling a wake‑up call for the hyped AI spending spree that both firms have embarked upon. The firm now believes the pair may struggle to deliver the outsized, cloud‑era‑style returns that the market has baked into their valuations. According to analyst Alex Haissl, the problem is that investors are treating the massive capital expenditures for generative AI as though they were replicating the low‑cost, high‑margin “cloud 1.0” model — but he argues that reality looks very different this time around. He pointed to high cost structures, a tougher pass‑through of those costs to end users, and uncertainty in profitability. The takeaway: While Amazon and Microsoft are still expected to grow, the scale and speed of upside that markets assumed may no longer be credible. With expectations reset, they may face a longer and more arduous road ahead to deliver meaningful returns for shareholders. #AIinvestment #TechBear #Amazon #Microsoft #SlimScan #GrowthStocks #CANSLIM