Microsoft (MSFT) surged on Tuesday after the software giant detailed how it plans to monetize its artificial intelligence innovations.
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At the company’s Inspire conference, Microsoft gave pricing information for its artificial intelligence technology. The Redmond, Washington-based company will charge enterprise customers $30 per month for each user of Microsoft 365 Copilot, an AI-based productivity tool, Microsoft said in a blog post.
The price was much higher than expected, Jefferies analyst Brent Thill said in a note to clients. This showed the company’s confidence in the product as well as its pricing power, he said.
Thill also reiterated his buy rating on Microsoft shares with a price target of 400.
Microsoft shares rise on Inspire News
In trading today, Microsoft stock jumped 4% to close at 359.49. Earlier in the session, it hit an all-time high of 366.78.
Wedbush Securities analyst Daniel Ives said the AI pricing news was “a jaw-dropping announcement and one the street has been waiting on pins and needles for.”
“We view the initial pricing details as highly optimistic for the total cloud addressable AI market opportunity for Microsoft,” Ives said in its note to clients.
Ives believes that Microsoft stock is outperforming with a price target of 375.
Ives predicted that more than 50% of Microsoft’s enterprise customers will adopt its AI functionality within the next three years.
Microsoft launches Bing Chat Enterprise
Also at Inspire, Microsoft announced Bing Chat Enterprise, an extension to its AI-enhanced Bing search engine. Bing Chat Enterprise is intended for internal use by businesses and organizations, the company said. It can help employees quickly generate content, analyze or compare data, summarize documents, and more.
Bing Chat Enterprise is being rolled out in preview mode and is included at no additional cost to businesses and enterprise Microsoft 365 customers. Additionally, it will be available in the future as a standalone offering for $5 per user per month, Microsoft said.
The Microsoft Inspire conference is taking place online Tuesday and Wednesday.
Meanwhile, Microsoft stocks are on the IBD Tech Leaders and Long-Term Leaders lists.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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