Jim Cramer Says Pressure From Generative AI "Shaved the Microsoft Price-to-Earnings Multiple Pretty Mightily"

Microsoft Corporation (NASDAQ:MSFT) is one of the stocks in focus as Jim Cramer shared his weekly game plan. Cramer highlighted why the company’s valuation has dropped. He stated:

CNBC Investing Club members, look out. You’re going to be flooded with emails Wednesday because Charitable Trust holdings, Danaher, Starbucks, GE Vernova, Microsoft, Meta, and Corning all report. Let me give you a preview… A bunch of the Mag Seven stocks have been underperforming, at least until today, when they roared. Still, Microsoft, Meta, and non-club company Tesla have turned into stocks that are very difficult to own except for select days. Microsoft’s been weak in part because all software companies are under pressure from generative AI. I think that’s a false worry in this case, but it’s shaved the Microsoft price-to-earnings multiple pretty mightily.

Microsoft Corporation (NASDAQ:MSFT) develops software, hardware, and cloud-based solutions. The company provides products like Windows, Azure, Office, LinkedIn, and Xbox. Cramer mentioned the company during the January 7 episode and said:

How about Microsoft? Alright, this company’s been doing very well, but its stock’s been punished by the fact that management wants to spend a fortune on AI. Ever since Microsoft reported its latest quarter, the stock’s going pretty much straight down. How often do you get to buy the stock of Microsoft at $485 after it traded at $555 last summer? I know the answer. Not very often.

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Disclosure: None. This article is originally published at Insider Monkey.