As per Wedbush analyst Dan Ives, the debut of Microsoft’s AI tool CoPilot signifies a transformative moment similar to the impact of the iPhone, set to reshape the company’s growth trajectory.
Recent feedback from Microsoft’s IoT clients, as outlined by Ives in a report on Wednesday, has been increasingly positive, indicating a promising outlook for the monetization potential of this product by 2024.
Ives envisions this as Microsoft’s pivotal moment in AI advancement, foreseeing a significant shift in growth trends in Redmond driven by artificial intelligence in the years ahead. He stated, “Based on our latest research, we anticipate that more than 60% of Microsoft’s installed base will transition to leveraging AI functionalities for enterprise and commercial purposes within the next three years.”
Anticipated developments in AI applications over the next few months will set the stage for Microsoft’s strategic roadmap leading up to 2025.
In response to the burgeoning monetization opportunities presented by Microsoft’s AI initiatives, Ives has raised the price target for the company from \(425 to \)450, reflecting a potential upside of 21% from the current valuation.
Highlighting the transformative potential of CoPilot, Ives projects that it could contribute an additional $25 billion to Microsoft’s revenue in the upcoming fiscal year. He emphasized, “We believe the market has yet to fully appreciate the forthcoming wave of growth in cloud and AI that will position Microsoft competitively against industry giants like Amazon and Google.”
Ives also noted that Microsoft, under the leadership of CEO Satya Nadella, has significantly increased its investment in AI, allocating \(35 to \)40 towards AI initiatives for every $100 spent on the Azure cloud platform in recent years.
Describing CoPilot as “your daily AI companion,” Ives foresees a broad spectrum of applications across Microsoft’s product portfolio, including Windows, Power Pages, Dynamics 365, and Office, catering to diverse customer needs for enhanced productivity.
Looking ahead, Ives predicts that Microsoft’s strategic embrace of AI, alongside broader industry trends, will unleash a “$1 trillion AI spending surge” over the next decade, comparable to the internet boom of the 1990s.
