Tech giant Microsoft (MSFT) said yesterday that it expects to incur a one-time impairment charge of $800 million from General Motors’ (GM) Cruise business closure. The charge will impact the diluted earnings per share (EPS) by $0.09 in the second quarter of Fiscal 2025 results, due next month. Microsoft bought a minority interest in Cruise in January 2021, as part of a $2 billion funding round. Cruise was valued at over $30 billion then.
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The announcement came alongside the results of Microsoft’s 2024 Annual Shareholders Meeting held on December 10. Interestingly, one of the important agendas dismissed by shareholders was Microsoft’s intent to invest in cryptocurrency Bitcoin (BTC-USD).
General Motors announced on Monday that it would shut down its autonomous robotaxi unit, Cruise. The decision comes as GM finds it increasingly difficult to scale the business amid intense competition. GM has already invested over $10 billion in Cruise since 2016. GM is the majority owner of Cruise with an over 90% stake.
Insights from TipRanks’ Bulls Say, Bears Say Tool
Microsoft has several well-established businesses. According to TipRanks’ Bulls Say, Bears Say tool, some analysts are impressed with Microsoft’s leadership position in the AI (artificial intelligence) infrastructure market, the stability and margins of its AI revenues, and the robust momentum of its Copilot tool.
On the other hand, some analysts are concerned about growing capex bearing lower returns, lower-than-expected Azure growth expectations, and AI investments being a drag on margins.
Is Microsoft a Good Stock to Buy?
Despite the contrasting opinions, Wall Street remains bullish about Microsoft stock. On TipRanks, MSFT has a Strong Buy consensus rating based on 26 Buys and two Hold ratings. Also, the average Microsoft price target of $497.36 implies 10.8% upside potential from current levels. Meanwhile, MSFT shares have gained 20.3% so far this year.
