When a U.S.-based company gets big and successful, it attracts regulatory scrutiny. Microsoft (NASDAQ:MSFT) is winning the artificial intelligence tech war but has attracted government watchdogs. It may be the target of a regulatory probe for a while, but Microsoft stock still earns a “B” grade. Don’t sell it if you’re in it for the long haul.

Earlier this year, Federal Trade Commission Chair Lina Khan said the agency would crack down on deals that “enable dominant firms to exert undue influence or gain privileged access in ways that could undermine fair competition.” MSFT certainly qualifies as a “dominant firm.” Let’s examine the FTC’s probe and its implications for investors.

Microsoft Is in the FTC’s Crosshairs

Frankly, it was a brilliant move for Microsoft to invest $13 billion in ChatGPT generative AI chatbot developer OpenAI. This move gave Microsoft an early lead in the gen-AI wars that started in 2022.

Microsoft has embedded OpenAI’s technology into products/services such as Bing, Word, PowerPoint, CoPilot and Azure. Consequently, Microsoft has a huge advantage over the company’s Big Tech rivals.

However, Khan warned, “There’s no AI exemption from the laws on the books.” Furthermore, Khan stated that the FTC is “looking closely at the ways companies may be using their power to thwart competition or trick the public.”

Thus, The New York Times broke the news story that the FTC will proceed with an antitrust inquiry into Microsoft’s deal with OpenAI.

It’s an ongoing story that could take months or even years to play out, so Microsoft’s shareholders should hunker down and prepare for a potentially prolonged legal battle.

Microsoft Stock Still Gets a Price Target Hike

This doesn’t mean that you have to panic-sell your Microsoft stock shares, though. It only means that informed investors should keep tabs on recent developments with this news story.

Remember, Microsoft successfully acquired Activision Blizzard despite an FTC investigation. Thus, even a powerful regulatory agency like the FTC isn’t invincible.

At least one Wall Street expert seems to be unfazed by the FTC’s antitrust inquiry into Microsoft. In fact, Oppenheimer analysts recently raised their price target on Microsoft stock from $450 to $500.

They also reiterated their “outperform” rating on Microsoft shares. With that, the Oppenheimer analysts provided some optimistic commentary about Microsoft, per TheStreet:

“Oppenheimer said the OpenAI partnership is positive and sustainable, giving OpenAI access to the best AI infrastructure, critical data, and funding, and Microsoft exclusivity to the best AI model.”

Microsoft Stock: Don’t Panic – Just Pay Attention

The takeaway is that there are positive negative aspects to Microsoft’s dominance in the gen-AI field. It’s positive that Microsoft has such a powerful position in the gen-AI wars.

Yet, it’s negative that Microsoft is so successful that the company is a target of regulatory scrutiny. That’s just the way it goes, so Microsoft should pay attention to the news and look for further developments in this story.

Meanwhile, Microsoft stock gets a “B” grade from us, and investors don’t have to dump their shares right now.

On the date of publication, Louis Navellier had a long position in MSFT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.