Microsoft (NASDAQ:MSFT) is requesting about 700 to 800 of its China-based employees in cloud computing and artificial intelligence (AI) units to consider relocating overseas, as per the Wall Street Journal’s report. The company offered staff, mostly engineers, with Chinese nationality an option to transfer to countries including the U.S., Ireland, Australia, and New Zealand.
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The move comes amid escalating tensions between the U.S. and China, as the Biden Administration recently imposed higher tariffs on several products imported from China. Moreover, there is a possibility that the U.S. government would require major cloud-computing companies to obtain licenses before providing access to Chinese clients for utilizing AI chips.
Interestingly, Microsoft has maintained a presence in China for more than 20 years. The country is home to the company’s largest R&D center outside the United States. MSFT’s China cloud and AI unit actively contributes to the company’s global R&D efforts for its core products.
Microsoft’s Risk Analysis
TipRanks’ Risk Analysis tool helps keep track of any changes made to a company’s risk factors in its most recent earnings report. As per our database, Microsoft’s legal and regulatory risk exposure is higher than the industry average. Legal and regulatory risks account for 29.6% of its total risks, compared with the industry average of 20.3%.
It should be noted that the company recently updated one of the risks under the legal and regulatory category. The updated risk relates to the potential impact of new market regulations on the company’s product design and marketing capabilities in key markets such as the U.K., the U.S., and China.
Thus, it is reasonable to assume that the company is preparing itself for the rising trade tensions between the U.S. and China.
Is Microsoft a Buy, Hold, or Sell?
Overall, the company’s efforts to strengthen its global presence in the cloud computing and gaming businesses continue to fuel its growth.
Based on 31 Buys, one Hold, and one Sell recommendation, the stock has a Strong Buy consensus rating. The analysts’ average price target on Microsoft stock of $489.90 implies an upside potential of 15.79% from current levels. Shares of the company have gained 12.9% so far this year.
