Why Microsoft Stock Is Sinking Today
Key Points
Microsoft stock is losing ground following a new executive order signed by President Donald Trump.
The order asks AI companies to submit new artificial intelligence models for review by the federal government.
The executive order could wind up having a relatively small impact on Microsoft and the overall AI landscape.
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Microsoft (NASDAQ: MSFT) stock is moving lower in Tuesday's trading and taking part in a broader pullback for category-leading artificial intelligence software stocks. The company's share price was down 4.1% as of 3:30 p.m. ET.
Microsoft's share price is retreating in response to a new executive order signed by President Donald Trump that encourages companies to take part in a new AI software review program. While participation in the program is voluntary, investors are having a negative reaction to the order.
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Trump's latest AI order is dragging Microsoft lower
News hit today that President Trump had signed an executive order that will establish a program led by the federal government to review AI models. The review system is seemingly designed to evaluate potential security implications and overall capabilities and potentially assign some trusted partners with early access to advanced AI systems. As a creator of high-performance AI software, Microsoft is the kind of company producing the types of models that the new review process is seemingly aimed at evaluating.
Should Microsoft shareholders be worried?
While Microsoft has a close relationship with the U.S. government and could face some pressure to participate in the program established by the executive order, investors probably shouldn't fret too much about the order Trump signed today. For starters, participation in the program is voluntary -- and it seems unlikely to have a disruptive impact on Microsoft's progression in the AI space. Even if the company chooses to participate in the program, there appears to be little in the order's current framework that meaningfully curtails the business's long-term AI opportunities.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.
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