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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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
- Kiplinger's Earnings Calendar for This Week
- Should You Invest in Nvidia After Its Stock Split?
- Analysts' Top S&P 500 Stocks to Buy Now
-
What You Need to Do With Your 401(k) Before 2025 Is OverBefore 2025 ends, check your 401(k) contributions, investments, and catch-up eligibility to lock in this year’s tax savings and employer match.
-
3 Year-End Tax Moves You Can't Afford to MissDon't miss out on this prime time to maximize contributions to your retirement accounts, do Roth conversions and capture investment gains.
-
A Tax Diversification Strategy for Your Retirement IncomeSpreading savings across three "tax buckets" — pretax, Roth and taxable — can help give retirees the flexibility to control when and how much taxes they pay.
-
I'm a Tax Attorney: These Are the Year-End Tax Moves You Can't Afford to Miss
Don't miss out on this prime time to maximize contributions to your retirement accounts, do Roth conversions and capture investment gains.
-
I'm an Investment Adviser: This Is the Tax Diversification Strategy You Need for Your Retirement Income
Spreading savings across three "tax buckets" — pretax, Roth and taxable — can help give retirees the flexibility to control when and how much taxes they pay.
-
Dow Rises 497 Points on December Rate Cut: Stock Market TodayThe basic questions for market participants and policymakers remain the same after a widely expected Fed rate cut.
-
Could an Annuity Be Your Retirement Safety Net? 4 Key ConsiderationsMore people are considering annuities to achieve tax-deferred growth and guaranteed income, but deciding if they are right for you depends on these key factors.
-
I'm a Financial Pro: Older Taxpayers Really Won't Want to Miss Out on This Hefty (Temporary) Tax BreakIf you're age 65 or older, you can claim a "bonus" tax deduction of up to $6,000 through 2028 that can be stacked on top of other deductions.
-
JPMorgan's Drop Drags on the Dow: Stock Market TodaySmall-cap stocks outperformed Tuesday on expectations that the Fed will cut interest rates on Wednesday.
-
Meet the World's Unluckiest — Not to Mention Entitled — Porch PirateThis teen swiped a booby-trapped package that showered him with glitter, and then he hurt his wrist while fleeing. This is why no lawyer will represent him.
-
Smart Business: How Community Engagement Can Help Fuel GrowthAs a financial professional, you can strengthen your brand while making a difference in your community. See how these pros turned community spirit into growth.
