This article first appeared on GuruFocus.

Microsoft (NASDAQ:MSFT) could face increasing pressure on profitability as artificial intelligence-related infrastructure spending continues to rise, according to a research note issued by Stifel on Wednesday.

Stifel analyst Brad Reback lowered his price target on Microsoft to $400, citing concerns that current Wall Street forecasts may not fully account for the financial impact of expanding AI and cloud infrastructure investments, according to a Wednesday research note.

The analyst said Microsoft is likely to experience margin pressure as it scales Azure and other AI services. Reback projects fiscal 2027 gross margin of about 63%, below the broader…