Microsoft’s AI Subscription Isn’t Cheap, But Wall Street Is Loving It
Key takeaways
- Microsoft’s Copilot subscription for enterprise clients has a hefty $30 monthly price tag
- The cost brings user subscription costs up by 83%
- Microsoft stock rose as much as 5.8% with the announcement, closing at an all-time high
Ready to let AI take the reins on some tasks in Teams, Excel and Word? Microsoft is rolling out a package to do just that — but it’s charging a pretty penny for it. It’s another step forward for the Big Tech giant’s strategy in increasing reliance on AI tools in its Microsoft 365 suite — and showing investors the profit potential. Read on to find out how Microsoft’s stock fared at the news.
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What’s Microsoft’s latest AI play?
Microsoft’s Copilot, which is an AI assistant for enterprise clients that ranks emails, offers writing prompts and designs presentations, among others, is set to cost an extra $30 a month for clients, the Big Tech behemoth has announced. Copilot is set to provide additional AI-powered functionality for the Microsoft 365 suite, including Excel, Word and Teams.
The additional $30 uplifts Microsoft’s enterprise clients at an impressive 83%, which is one of the earliest demonstrations of how companies can leverage AI to increase profit margins. Still, there are some concerns the additional expense might be off putting to businesses.
600 enterprise customers, including KPMG, Lumen and Emirates NBD, have trialed the new service. There’s no release date on the Copilot just yet, but Microsoft’s head of marketing, Yusuf Mehdi, said in a new blog post that “We’re learning that the more customers use Copilot, the more their enthusiasm for Copilot grows”. Promising stuff, indeed.
Wall Street’s reaction
Investors reacted accordingly, googly-eyed at the prospect of tangible evidence that AI can make companies more money. Microsoft shares were up as high as 5.8% at the announcement, reaching an all-time high close on Tuesday at $359.49. Microsoft shares also broke an intraday trading record, hitting $366.78.
Microsoft has performed astoundingly well this year, buoyed by its big bet on AI. It’s gained 45% this year so far, pulling back the lead again from Alphabet, whose stock is only up 35% in comparison.
The bottom line
While the price is higher than what many anticipated, Microsoft is clearly betting on its enterprise user base forking out for the AI-powered subscription. Investors have rewarded the stock handsomely, with no signs of slowing down. Actually, Microsoft just appears to be getting started.
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