Already betting big on AI, a slew of announcements shows Microsoft (NASDAQ:MSFT) is charging ahead with its AI-driven endeavors.
The latest Windows 11 update (released Tuesday- Sept 26) features the integration of the Copilot AI assistant tool, which is also set to get a full rollout in Microsoft 365 on November 1. And at its recent Surface and AI event in New York, the company also unveiled new Surface hardware including the Surface Laptop Studio 2 and Surface Laptop Go 3.
The latest news comes on the back of several Copilot announcements made over the past months. According to Goldman Sachs analyst Kash Rangan, these announcements highlight Microsoft’s unwavering commitment to executing its Copilot product roadmap successfully. They also underscore the ongoing strength of Microsoft’s partnership with OpenAI, with Dall.E 3 playing a pivotal role in enabling numerous use cases.
Based on recent conversations with industry players and given the fact there are tens of thousands of enterprise users in the Microsoft365 Copilot Early Access Program, Rangan says he continues to “pick up signals of elevated demand.”
Starting in November/December and heading into next year’s first quarter, Rangan thinks investors will be able to start evaluating how all this activity translates to adoption and monetization. The rollout to a substantial group of Windows 11 Enterprise clients and a user base of over 160 million commercial Office 365 users can function as a reference point for assessing industry-wide acceptance and gathering product input.
The size of the opportunity ahead, combined with Microsoft’s capabilities should not be underestimated as the race for AI dominance heats up, says Rangan. “Microsoft’s speed to market, strong presence across the tech stack and well-established footprint within the enterprise give us confidence that Microsoft is well positioned to drive growth on the back of these announcements and be a key leader in the Gen-AI era,” the 5-star analyst explained. “Microsoft should be able to capture a strong part of its $135bn+ TAM within M365, with additional opportunities across Azure, Windows, Dynamics and Bing/Edge.”
All told, Rangan maintained a Buy rating on MSFT shares, backed by a $400 price target. Investors could be sitting on gains of 28%, should Rangan’s forecast play out over the coming months. (To watch Rangan’s track record, click here)
Elsewhere on the Street, the stock garners an additional 33 Buys and the addition of 4 Holds can’t detract from a Strong Buy consensus rating. Going by the $397.19 average target, a year from now, investors will be sitting on returns of 25%. (See Microsoft stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
