<div id="readability-page-1">It's no stretch to say that the world has been captivated by AI, which has led to immense changes throughout the tech industry and society at large. Hyperscalers are placing billions of dollars in bets on the technology, and Microsoft (NASDAQ:MSFT) is certainly among them.<h3>Claim 70% Off TipRanks This Holiday Season</h3><ul><li>Unlock hedge-fund level data and powerful investing tools for smarter, sharper decisions </li><li> Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential</li></ul> The company's $34.9 billion in capex from Q1 2026 outpaced its earlier guidance of $30 billion and speaks to Microsoft's intention to err on the side of spending. During its most recent earnings call at the end of October, management expressed the company's intention of increasing total AI capacity by more than 80% this year and to more than double its &#34;data center footprint&#34; over the next two. Investor David Desjardins is worried that the company has gone overboard. &#34;Despite its highly cash-generative cloud business and its bulletproof balance sheet, Microsoft is not immune to the risk of overbuilding computing power capacity,&#34; cautions the investor. Desjardins is particularly worried about Microsoft's exposure to OpenAI, and how the ChatGPT maker will fare in the years ahead. For starters, Microsoft has a significant investment in OpenAI's for-profit entity of around 27%. Moreover, OpenAI has also contracted to buy $250 billion worth of Microsoft's Azure services. This &#34;next chapter&#34; in the partnership between the two companies, announced in October, came on the heels of an even bigger, $300 billion deal between OpenAI and Oracle. &#34;It remains to be seen how a young and unprofitable start-up will ultimately honor those commitments,&#34; wonders Desjardins. Taking a step back, the investor suggests that AI's growth cadence will mirror those of other revolutionary technologies. He notes that enormous infrastructure builds in the past – the investor cites canals, railroads, and fiber connectivity – shared cyclical patterns. &#34;The euphoria subsided with time and gave place to panic, as expectations had become too high relative to the reality on the ground,&#34; adds Desjardins, who expects history to repeat itself this time around. Expecting progress to be far from linear, Desjardins is assigning MSFT a Sell rating. (To watch David Desjardins' track record, click here) That's not a very popular opinion on Wall Street. With 32 Buys and 2 Holds, MSFT sails to a Strong Buy consensus rating. Its 12-month average price target of $631.36 would translate into gains of close to 30% in the year ahead. (See MSFT stock forecast) </div>

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Investor David Desjardins expresses concern over Microsoft's aggressive AI investments, fearing overbuilding computing capacity and exposure to OpenAI. Despite Microsoft's strong financials, Desjardins assigns a Sell rating, predicting cyclical patterns similar to past infrastructure builds. This contrasts with Wall Street's Strong Buy consensus, with a 12-month price target suggesting a 30% gain.

- The article discusses the significant investment Microsoft is making in AI technology, with a projected $34.9 billion in capital expenditures for Q1 2026.  
- Investor David Desjardins expresses concern over Microsoft's potential for overbuilding computing power and its reliance on OpenAI, particularly questioning the feasibility of commitments made by the unprofitable startup.  
- Despite these concerns, Wall Street maintains a strong positive outlook on Microsoft, with a consensus rating of Strong Buy and a predicted price target suggesting substantial future gains.

'Too Much of a Good Thing,' Says Investor About Microsoft Stock