Microsoft shares powered by artificial intelligence in Office apps

Microsoft ( MSFT ) stock hit a buy point Friday after the company announced it is adding artificial intelligence tools to its popular Office productivity applications.


The Redmond, Wash.-based software giant introduced Microsoft 365 Copilot on Thursday. Microsoft integrates Copilot features into apps that many employees use every day, including Word, Excel, PowerPoint, Outlook and Teams.

Copilot uses next-generation AI to automate and simplify tasks. In addition, the software is currently being tested with selected commercial customers. But Microsoft did not detail how it intends to monetize Copilot.

Microsoft also announced Business Chat. The new experience works across Office apps and a customer’s calendar, emails, chats, documents, meetings and contacts to do things that people weren’t able to do before.

For example, with natural language prompts like “tell my team how we updated the product strategy,” Business Chat will generate a status update based on the morning’s meetings, emails and chat threads, Microsoft said.

Microsoft shares rise on AI news

“Based on the content and context of your business, Copilot delivers results that are relevant and actionable,” said Jared Spataro, Microsoft’s vice president of modern work and business applications, in a press release. “It is enterprise-ready, built on Microsoft’s comprehensive approach to security, compliance, privacy and responsible AI. Copilot marks a new era in computing that will fundamentally transform the way we work.”

In morning trading on the stock market today, Microsoft shares rose 2.3% to 282.65. Microsoft stock also broke out of a flat base at a 276.86 buy point with the move, according to IBD MarketSmith charts.

Copilot called Big Productivity Enhancer

In a note to clients, Mizuho Securities analyst Gregg Moskowitz called Copilot “a leap forward in AI-powered productivity.”

Moskowitz also reiterated his buy rating on Microsoft shares and raised his price target to 315 from 300.

“Microsoft 365 Copilot will be a huge productivity booster for users,” he said. “We continue to see very broad AI adoption for Microsoft across consumer and enterprise use.”

At a presentation Thursday, Microsoft showed how Copilot can generate content from work files with simple voice or text commands. Examples include “create a slideshow”, “analyze sales data” and “prioritize my email inbox”.

Will be difficult for rivals to match

Microsoft 365 Copilot will be very difficult for rivals to imitate, Oppenheimer analyst Timothy Horan said in a note to clients. First, Microsoft has a huge base of 1.5 billion users. It also has access to OpenAI technology.

Further, he noted that Alphabet (GOOGL) entity Google and Sales force (CRM) had “me-too” messages timed with Microsoft’s presentation.

Deutsche Bank analyst Brad Zelnick maintained his buy rating on Microsoft shares after the event.

“As the system matures, we are optimistic that Microsoft 365 Copilot will be widely ingrained into workflows to drive productivity and business value,” Zelnick said in a report. “A focus on productivity, or the ability to do more with less, has long been an important tenet of Microsoft’s overall value proposition.”

Microsoft Stock is a long-term leader

UBS analyst Karl Keirstead took a more cautious stance. He maintained his neutral rating on Microsoft shares but raised his price target to 275 from 250.

Microsoft still has hurdles to overcome with Copilot, he said. They include monetizing the technology and demonstrating its utility in practice.

“The apparent productivity gains from the technology – which can create presentations, filter and summarize emails, draft Word documents, create Excel templates and more – appeared to be significant, and the demo probably impressed even the biggest skeptics,” said Keirstead in a note to clients.

Meanwhile, Microsoft shares are in the IBD Long-Term Leaders Portfolio.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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