TechFeb 13, 2024
AI Helped Make Microsoft the World’s Most Valuable Stock. Staying There Relies On a $30/Month Subscription.
Cloud Computing
Noah Weidner
Discover
Microsoft (NASDAQ:MSFT) has a message for the market: we are so back. Over the last year, the tech giant overtook Apple (NASDAQ:AAPL) as the world’s most valuable company — fueled by a $10B investment in OpenAI and breakneck growth in its Cloud business.
After talking the talk, analysts will want to see it walk run — and CEO Satya Nadella hopes that the key to scaling AI could be its AI companion, Copilot. The product plugs OpenAI’s GPT-4 into popular Microsoft products like Windows, Word, and Teams — and can write emails, organize information, and summarize meetings.
Not ready for takeoff: Despite supposedly strong demand for Copilot, Microsoft is struggling to convince AI-skeptical companies to shell out for its new and unproven AI companion, which RBC Capital analyst Rishi Jaluria says “has to be a success” for Microsoft’s recent stock boom to stand up (WSJ).
Although analysts previously projected Copilot to contribute an extra $10B in annual revenue for Microsoft, nearly 5% of its total in 2023, competition is heating up — and it’s uncertain whether businesses can justify paying an AI tax to access AI features across hundreds of different software subscriptions.
Worth the price? As more players enter the AI market, businesses and analysts may be overestimating the immediate benefits of AI compared to what it could do for them in 20 years. Copilot’s $30/mo subscription price might alienate it from the cheaper competition, which could leave Microsoft with no choice but to either pack more value into the product or drop the price.
