Microsoft (MSFT) shares are trading lower Thursday on news the Federal Trade Commission (FTC) is probing whether the tech giant structured its recent deal with artificial intelligence (AI) startup Inflection AI to avoid an antitrust review, according to The Wall Street Journal.
In March, Microsoft hired Inflection AI's co-founder and nearly all of its employees, agreeing to pay the startup approximately $650 million as part of a licensing deal to resell its technology, the WSJ said.
However, Microsoft did not acquire the company outright, so the FTC is trying to determine if the deal was structured so that MSFT can take control of Inflection AI without a full review of the transaction by the regulatory agency, the report added, citing a person familiar with the matter and records viewed by The Wall Street Journal.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If the FTC finds that Microsoft should have reported the transaction and submitted it for review, it could bring enforcement action, which could include a fine or suspension of the transaction while it conducts a full investigation. A Microsoft spokesperson said the company is confident it complied with antitrust laws.
Inflection AI, a prominent name in artificial intelligence and the creator of the Pi chatbot, raised over $1.3 billion in a funding round led by Microsoft and top AI stock Nvidia (NVDA) back in June 2023.
In January, the FTC announced an investigation into Microsoft's relationship with OpenAI, as well as other large technology companies with investments in generative AI companies.
"History shows that new technologies can create new markets and healthy competition," FTC Chair Lina Khan said in a January 25 statement. "As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity. Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition."
Where does Microsoft stock stand with analysts?
Microsoft is one of the best-performing Dow Jones stocks this year, up nearly 13%. The company's long-term gains are even more impressive and if you invested $1,000 in MSFT stock 20 years ago, you'd be sitting on a handsome return.
Unsurprisingly, then, analysts are very bullish on the blue chip stock. According to S&P Global Market Intelligence, the consensus analyst target price for MSFT stock is $482.21, representing implied upside of about 14% to current levels. Meanwhile, the consensus recommendation is a Strong Buy.
Related Content
-
How to Invest in SportsIf it's springtime, Forbes is out with its annual list of baseball franchise values. The billions involved might make you wonder how to invest in sports.
-
What’s Happening With Trump’s Tariffs? Key Updates for April 2025Tariffs Donald Trump continues to use tariffs as a central tool of his trade policy. Here’s where tariffs stand now.
-
How to Invest in SportsIf it's springtime, Forbes is out with its annual list of baseball franchise values. The billions involved might make you wonder how to invest in sports.
-
Winning Strategies for Financial Advisers as Clients' Lives EvolveHow can the wealth management industry help make life transitions easier for the adviser and the client?
-
How Advisers Can Establish Relationships With HNW ProspectsThese strategies can help to build influence with high-net-worth individuals, who are often looking to an adviser for insight rather than solutions.
-
When Your Car Is Fixed, But You've Still Got the ProblemThis reader's experience with trying to get squealing brakes fixed under an extended warranty mirrors what others are experiencing these days.
-
Stock Market Today: Dow Rises 854 Points From Its Intraday LowIf there's one thing markets hate, it's uncertainty. But uncertainty is all they're getting these days.
-
Seven Questions to Ask When Evaluating Personal Loan OptionsTaking out a personal loan too hastily could lock you into unfavorable terms with an untrustworthy lender. Ask these questions before signing anything.
-
How Much Does Being Rich Matter in Retirement?After a certain point, having more money in retirement won't make you any happier, new research shows. Instead, physical health, a sense of purpose, and a minimal amount of non-mortgage debt are more relevant.
-
The Three Biggest Fears Keeping Retirees Up at NightHere are the steps you can take to put those fears to rest and retire with confidence so you can relax and enjoy the life you've planned.
