Microsoft stock rose to an all-time high on Tuesday after the software giant announced its pricing strategy for adding generative artificial intelligence capabilities to its flagship Microsoft 365 software, which includes Word, PowerPoint, Excel, Outlook and Teams.
The company said Microsoft (Ticker: MSFT) 365 Copilot will be offered to business customers at $30 per user, per month.
“Copilot starts with your creativity in Microsoft Word, analyzes data in Excel, designs presentations in PowerPoint, tidies up your inbox in Outlook, sums up meetings in Microsoft Teams – whether you attend or not – and much more,” Microsoft said in its announcement.
Microsoft shares jumped 4% on Tuesday, to $359.49, a record closing level. Earlier in the session, shares hit a record intraday high of $366.78.
Mark Murdler, an analyst at Bernstein, notes in a research note on the news that the 365 Copilot is priced higher than expected — amounting to a price increase of 53% to 240%, depending on which version of Microsoft 365 a particular customer is using.
Moerdler noted that the announcement focused on Microsoft 365, not the limited set of tools and programs included with Office 365.
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“The company may think this is another way to not only push new subscriptions” but also to convert more users to Microsoft 365, which has a higher price per user.
The company also announced that it will offer a standalone chatbot application for business customers — Bing Chat Enterprise — for $5 per user, per month.
Dan Ives, an analyst at Wedbush, writes that he found the pricing announcement “extremely bullish for Microsoft’s total controllable cloud AI market opportunity,” with the potential to increase annual cloud revenue by 20% by 2025.
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Similarly, Citi analyst Tyler Radke wrote that prices were well above his own forecast of between $5 and $20 per month. “While general availability is likely still several months away,” he writes, “we view this as an incremental positive.”
Write to Eric J. Savitz at [email protected]
