Microsoft (NASDAQ:MSFT) Slips as OpenAI Turns Competitor
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Microsoft (NASDAQ:MSFT) Slips as OpenAI Turns Competitor

Story Highlights

Microsoft may have to directly compete with the company it backed, OpenAI, but it will have several other revenue streams to help sustain it.

While Microsoft’s (NASDAQ:MSFT) backing likely made OpenAI what it is today, there are signs that OpenAI won’t remain a loyal fiefdom to the tech giant much longer, if it ever really was. In fact, the word that OpenAI is looking to directly compete with Microsoft proved bad news, sending shares down fractionally in Friday afternoon’s trading.

Reports note that OpenAI has been offering up its services to “…hundreds of Fortune 500 company executives,” a move that’s putting it right alongside Microsoft in some cases. OpenAI has even staged outright events in places like New York, London, and San Francisco just this month alone. With ChatGPT Enterprise now counting about 600,000 users to its credit—up from just 150,000 in January—it’s clear that OpenAI’s product line is catching on, and Microsoft may have to face a growing competitor of its own making.

Other Opportunities in Play

While Microsoft might lose some ground to OpenAI, Microsoft has a wide range of other projects in play that can keep it growing. Currently, Microsoft is looking to pivot LinkedIn to address influencer marketing. It recently added an option for advertisers to “amplify” posts from certain users, known as “Thought Leader Ads.” That may be just what LinkedIn needs to spark some growth, which has been sluggish of late.

Meanwhile, there are signs that Microsoft may be preparing to ditch the console after all, with the latest Xbox—known as the Series X2—considered a “console PC hybrid.” This may not be the best strategy. PC gamers remember some of the difficulties involved with PCs, like the requirement to update frequently. But the notion of PC gaming has certainly been improving in recent years, and this may be just what the field needs.

What Is Microsoft’s Target Price?

Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 35 Buys, one Hold, and one Sell assigned in the past three months, as indicated by the graphic below. After a 47.45% rally in its share price over the past year, the average MSFT price target of $474.08 per share implies 12.08% upside potential.



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