Analyst Alexander Haissl has taken a bold step, downgrading the stock ratings of both Microsoft and Amazon from 'Buy' to 'Neutral'. His rationale stems from the fact that the bullish case for generative AI has become increasingly murky, with the underlying economic fundamentals proving to be far weaker than initially anticipated.

Previously, the Nasdaq 100 Index witnessed a sell-off, as investors started to exit AI-related stocks amid concerns of overvaluation. Haissl's stance stands in stark contrast to that of the majority of his peers; indeed, over 90% of analysts covering these two stocks continue to rate them as 'Buy'.

He further elaborated that generative AI is not only more capital-intensive but also exhibits weaker pricing power. As a result, companies operating in this space are confronted with the risk of 'overbuilding', or investing excessively in capacity that may not be fully utilized.

Rothschild-Redburn has responded to these developments by lowering its target price for Microsoft's stock, while maintaining the target price for Amazon's stock. In a related move, Loup Capital has upgraded its rating for Alphabet, whose stock price has already surged by 49% this year.

Redburn is widely recognized for its in-depth research, and its analysts have a proven track record of accurately forewarning market downturns, such as the plunge in the stock price of Pfizer (corrected from 'Fizer').