Microsoft Records All-Time High On Adding Charges For New A.I. Subscription Services

After the firm disclosed the pricing of its new AI subscription service on Tuesday, Microsoft stock rose to a record high. The stock climbed 5.8% over the day to close at $359,49. The new artificial intelligence subscription service for Microsoft 365 will cost an additional $30 per month. The charges will be applied when generative AI is used with applications like Teams, Excel, and Word.

According to CNBC, "Adding on the subscription to Copilot, a generative AI assistant that works across Microsoft 365 programs, could increase monthly prices for enterprise customers as much as 83%."

"It's grounded in your business data in the Microsoft Graph - that's all your emails, calendar, chats, documents and more," Microsoft said in a statement.

Gagan Singla, MD for blinkX, an initiative by JM Financial said "On July 18, 2023, the stock price of Microsoft surged nearly 4%. Microsoft has gained 8.5% in the last one week and its market cap at $2.68 trillion is just short of Apple Inc at $3.05 trillion. The latest trigger for Microsoft stock has come from its pricing strategy for adding generative artificial-intelligence capabilities to its flagship Microsoft 365 software.

The copilot product with generative AI capabilities will be offered to business customers at $30 per user per month. Copilot is amazingly versatile. It can enhance creativity in Word, crunch data in Excel, summarize meetings on Teams and design presentations in PowerPoint. It needs no reiteration that Microsoft dominates the OS market and street analysts are of the view that the pricing of Microsoft 365 Copilot is better than expected.

It would charge at least 53% more to access new artificial intelligence features in its widely used office software (Source: Reuters), which is expected to boost the already robust bottom line of Microsoft. Microsoft is expected to benefit from this move in two ways. Firstly, it will be a launchpad to trigger fresh subscriptions. Secondly, it will push more users towards Microsoft 365, which commands a higher per-user price. Not only is this likely to expand the addressable cloud AI market for Microsoft, but can also boost Microsoft's cloud revenues."

After the market closes on Tuesday, July 25, 2023, Microsoft Corp. will release its financial results for the fourth quarter of fiscal year 2023.

On Tuesday, Microsoft unveiled a key addition to Bing Chat, its AI chatbot: visual search. Now, users can snap or submit a photo to Bing Chat and use the desktop or Bing mobile applications to get more information about it. Microsoft's Copilot subscription service enhances the company's well-known Office programmes like Word, Excel, and Teams with artificial intelligence.

"IT stocks are fuelled and chasing new highs globally. Microsoft is one of the leading software companies in the world, based in the US. The adoption of new AI and the upgradation of it in its most demanding product MS Office, has pushed a more positive sensitive view of its competitiveness and growth.

This proactive step will be the source of additional revenue for the company. MFST hit a fresh record high at 366.78 with 4% over yesterday's closing. It has formed a bullish pattern and getting ready for another impulsive move. 323 will act as major support for this uptrend and one can hold it with trailing at a given level. Keep targets expectation at 370/385/400/410/430/450/470 and 500. Fresh long positions could be initiated in the 348 - 356 range, CMP is 359 so, one can wait for a small pullback in it," said V.L.A. Ambala (SEBI Registered Research Analyst), Stock Market Today (SMT).

The first version of Microsoft Copilot, released in March, has a feature to create presentations, provide writing suggestions, record meetings, and categorise incoming emails. Microsoft Copilot AI tool is currently in the testing phase by clients such as Goodyear and General Motors.

Kush Gupta, Director, SKG Assets & Holdings Private Limited, said "Microsoft has tactfully grabbed the opportunity to capitalise on its most successful product - the MS Office. It's A.I announcement was well received with the stock price jumping 5%. The company is now offering A.I capabilities to MS Office applications such as Excel, Word and PowerPoint where users will be able to use a ChatGPT like software to complete daily tasks and all for a humble sum of $30 a month. MS Office suite has the most widely used applications all over the world, A.I enablement will improve efficiency, reduce time on mundane tasks. Hours spent on creating long spreadsheets could be reduced to minutes now. This could be the most effective effort to bring A.I in our homes and to our personal computer. Transforming the way we use computers like google did for internet."

"It also synergises their existing product offerings, users won't mind paying an extra $30 for the A.I support and the efficiency it can bring. Moreover, Microsoft can also aim to increase their user base in developing nations where MS office is widely distributed without a license or subscription. In India for example, most of the small businesses don't pay for MS Office but the new feature could tempt them to loosen the purse. Other companies in similar space don't have an existing product that is widely used and can be a base for cross selling an A.I subscription. Wall Street loves the first mover advantage and they love monopolies even more," Kush Gupta further added.