Give tech giant Microsoft (MSFT) credit; it innovates in as many directions as it can. But the problem with rapid innovation is that, sometimes, the market has a hard time keeping up. And Microsoft is starting to discover that lag with its Copilot systems, planning to make it less confusing. That news did not sit well with investors, though, based on the fractional loss in Microsoft shares in Thursday afternoon’s trading.
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Internal audio from within Microsoft itself reveals one serious problem: customers are having a hard time adapting to the sheer number of Copilot products out there, as several apps now carry Copilot branding. So Microsoft wants to fix this, not with rebranding, but by “…making experience coherent across apps.”
Right now, Copilot has a consumer version through Microsoft artificial intelligence (AI), and another that is basically a rebranded Microsoft Office. Both of these tools offer roughly the same chat experience. There is also a third Copilot, GitHub Copilot, but Microsoft does not count it, since “No one is confused about the context of GitHub Copilot.” Still, the fact that there even are multiple Copilots suggests that marketing efforts and branding issues need to reflect the sheer number of Copilots out there.
The Fallout Hit
Yesterday, we brought in word that Microsoft was planning a price hike to the Xbox Game Pass system. That, not surprisingly, did not go over well with customers. And the fallout from that move followed not long after as customer canceled their service in droves. Droves of sufficient size, in fact, that Microsoft’s systems are having a hard time keeping up.
The price hike did come with upgrades, including new priority in the cloud gaming queue and improved resolution. However, the upgrades did not seem to be a sufficient value for most gamers, who started canceling subscriptions en masse. And with Microsoft recently talking about how profitable Game Pass is, that came as one further kick in the teeth for gamers.
Is Microsoft a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 33 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 24.77% rally in its share price over the past year, the average MSFT price target of $627.95 per share implies 21.77% upside potential.
