Microsoft (MSFT) Hits Roadblocks in AI Chip Development—Can It Catch Up?
Microsoft's ambitious AI chip project is facing unexpected hurdles—just as the race for silicon supremacy heats up.
Behind the scenes: While rivals like NVIDIA and AMD dominate the AI hardware space, Redmond's in-house efforts are lagging. Internal roadmaps suggest delays in mass production, forcing continued reliance on third-party suppliers.
The irony? A trillion-dollar tech giant getting outmaneuvered in the infrastructure game—while still charging enterprises premium Azure AI fees. Typical software company move: monetize the hype while struggling to build the foundation.
One thing's clear: In the AI arms race, hardware isn't optional. And Wall Street's patience for 'coming soon' announcements wears thinner than 5nm process nodes.
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To stay competitive, Microsoft had rolled out a plan for three next-generation chips—Braga, Braga-R, and Clea—that were scheduled for release between 2025 and 2027. But now, with Braga delayed, there’s concern that the company may not meet its own schedule. These chips are specifically designed for inference, which is the process AI models use to make decisions. Microsoft had plans to design a chip for training AI models, but dropped that idea in early 2024. Braga’s delay got worse when OpenAI asked for added features that made the chip unstable during testing. This caused further delays and led to high stress and turnover. In fact, up to 20% of some teams left.
Meanwhile, other tech giants are making more progress with their custom AI chips. Amazon (AMZN) is preparing to launch its third-generation Trainium 3 chip by the end of the year, and claims it will be twice as powerful as its previous version. Google (GOOGL), which has spent nearly a decade developing its TPU (Tensor Processing Unit) chips, doesn’t rely on Nvidia to train most of its AI models. In addition, its upcoming chip, Ironwood, will start limited production later this year and go into full production in 2026. However, even Google hit a setback when key engineers from its chip partner MediaTek left to join Nvidia.
Is MSFT Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 30 Buys and five Holds assigned in the last three months. Furthermore, the average MSFT price target of $521.41 per share implies 4.6% upside potential.
