The troubles of Microsoft (NASDAQ:MSFT) and OpenAI are mounting as legal punches keep coming. In a recent development, these AI (Artificial Intelligence) powerhouses were sued by writers Nicholas Basbanes and Nicholas Gage. They accused both of these companies of misusing their work to train the AI models.
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Per a Reuters report, writers Nicholas Basbanes and Nicholas Gage contend that Microsoft and OpenAI violated their copyrights by incorporating their books into the data utilized to train OpenAI’s GPT large language model.
This lawsuit comes after the New York Times (NYSE:NYT) sued these companies over copyright infringement in December 2023. Further, both MSFT and OpenAI face several other lawsuits filed by fiction and nonfiction writers over the alleged use of their work to train AI programs. As MSFT faces significant legal and regulatory risks, let’s closely examine its risk profile.
Microsoft’s Risk Analysis
Microsoft has a history of dealing with various claims and legal disputes in the regular course of its business. As it is subject to several litigations, TipRanks’ Risk Analysis tool shows that MSFT’s legal and regulatory risk exposure is significantly higher than the industry average.
It’s worth noting that legal and regulatory risks account for 29.6% of its total risks, higher than the industry average of 20.3%.
Is Microsoft a Buy or Sell Right Now?
Wall Street is bullish about Microsoft stock due to its AI initiatives. It has 36 Buy and one Hold recommendations for a Strong Buy consensus rating. MSFT stock has gained over 63% in one year. Further, analysts’ average price target of $425.88 implies it has room to run by another 15.81% over the next 12 months.
