At first, Microsoft (NASDAQ:MSFT) landing Bethesda Game Studios seemed like a coup. But then “Starfield” came out and proved underwhelming to many gamers who were ready to give the third button on Todd Howard’s two-button vending machine a chance. Now, Microsoft is cutting costs, and four Bethesda studios are on the block as a result. That news sent the tech titan down fractionally in the closing minutes of Tuesday’s trading.
The closures are…well…pretty profound. Arkane Austin, who made “Redfall,” is shuttered. Tango Gameworks, who brought us the minor hit “Hi-Fi Rush” and franchise maker “The Evil Within,” is out. Alpha Dog Studios, makers of “Mighty Doom,” are down, and Roundhouse Games will be sublimated into ZeniMax Online Studios, which is about the only saving grace in the mess.
Meanwhile, “…a small number of roles across select Bethesda publishing and corporate teams will also be eliminated.” This will be done, as noted by the head of Xbox Game Studios Matt Booty, to “…prioritiz(e)…high impact titles and further invest…in Bethesda’s portfolio of blockbuster games and beloved worlds which you have nurtured over many decades.”
A Bigger AI Push
Microsoft isn’t just working on its gaming chops; it’s also got plans for a “far larger” artificial intelligence (AI) model. Its work with OpenAI has caught its own interest, and Microsoft is currently building MAI-1, which has, at last report, around 500 billion parameters. The sheer scope of MAI-1 will allow it to compete with several of the leaders in the field, including OpenAI, in which Microsoft is an investor. This gives Microsoft a bit of an edge, because it now has two paths to victory in which either its own horse wins or the horse it’s been feeding for the last several months does.
Is Microsoft a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 31 Buys, one Hold, and one Sell assigned in the past three months, as indicated by the graphic below. After a 33.8% rally in its share price over the past year, the average MSFT price target of $489.56 per share implies 19.66% upside potential.
