Microsoft (MSFTThe stock hit a buy point on Friday after the company announced it was adding artificial intelligence tools to its popular Office productivity apps.
The Redmond, Washington-based software giant on Thursday introduced Microsoft 365 Copilot. Microsoft is embedding Copilot functionality into the applications many workers use every day, including Word, Excel, PowerPoint, Outlook, and Teams.
Copilot uses next generation artificial intelligence to automate and simplify tasks. Furthermore, the software is currently in testing with select commercial clients. But Microsoft did not detail how it intends to monetize the co-pilot.
Microsoft also announced Business Chat. The new experience works across Office apps, a customer’s calendar, email messages, chats, documents, meetings, and a customer’s contacts to do things people couldn’t do before.
For example, with natural language prompts like “Tell my team how we updated product strategy,” Business Chat will generate a status update based on morning meetings, emails, and chat threads, Microsoft said.
Microsoft shares rise in artificial intelligence news
Jared Spataro, Microsoft corporate vice president of modern business and business applications, said New release. “It’s enterprise-ready, and built on Microsoft’s holistic approach to security, compliance, privacy, and responsible AI. Copilot marks a new era of computing that will fundamentally change the way we work.”
In today’s stock market midday trading, Microsoft stock advanced 0.5%, to 277.53. Also, Microsoft stock broke out of a firm overbought base at 276.86 with the move, according to IBD MarketSmith Charts.
The copilot is called a great productivity enhancer
In a note to clients, Mizuho Securities analyst Gregg Moskowitz called Copilot “a leap forward in AI-driven productivity.”
Moskowitz also reiterated his Buy rating on Microsoft stock and raised his price target to 315 from 300.
“Microsoft 365 Kopilot will be a great productivity booster for users,” he said. “We continue to see the potential for very broad application of AI for Microsoft across consumer and enterprise use cases.”
In a presentation Thursday, Microsoft showed how Copilot can generate content from work files with simple voice or text commands. Examples include “Create a Slide Presentation,” “Analyze Sales Data,” and “Prioritize My Email Inbox.”
It will be difficult for competitors to match
It will be very difficult for competitors to emulate Microsoft 365 Copilot, Timothy Horan, an Oppenheimer analyst, said in a note to clients. For example, Microsoft has a whopping 1.5 billion user base. It also has access to OpenAI technology.
Deutsche Bank analyst Brad Zelnick maintained a Buy rating on Microsoft stock after the event.
“As the system matures, we are optimistic that Microsoft 365 Copilot will be widely ingrained in workflows to increase productivity and business value,” Zelnick said in a report. “Focusing on productivity or the ability to do more with less has always been a key tenet of Microsoft’s total value proposition.”
Microsoft Stock is a long-term leader
Carl Kerstead, an analyst at UBS, took a more cautious stance. He maintained his Neutral rating on Microsoft stock but raised his price target to 275 from 250.
He said Microsoft still had hurdles to overcome with Kopilot. They involve monetizing technology and proving its usefulness in practice.
“The obvious productivity gains from the technology — which can create presentations, filter and summarize emails, draft Word documents, create Excel templates and more — seem tangible, and the demo likely impressed even the biggest skeptic,” Kerstead said. Note to customers.
Meanwhile, Microsoft stock is in the IBD Long-Term Leaders Portfolio.
Follow Patrick Seitz on Twitter at @employee For more stories on consumer technologies, software and semiconductor stocks.
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