Microsoft Copilot has finally arrived, and it's the "make or break" moment of this AI wave.

Microsoft Copilot, here it comes!

As the leader of this round of generative AI revolution, it is not an exaggeration to say that the future performance of Microsoft Copilot has a direct impact on the capital investment in the entire AI application side: if Microsoft can make money, the frenzy of application-side gold rush will soon come; if it cannot make money, the fourth industrial revolution will probably take a temporary break.

Copilot: The Arrival of AI New Era

At this press conference, Copilot naturally took the spotlight. With over 150 new features added to the Windows 11 system, almost all of them are AI-driven. Microsoft CEO Satya Nadella personally demonstrated various use cases of Copilot:

If users copy a large amount of text in an email, Copilot will automatically pop up on the right side of the desktop to help summarize the key points of the email and search for important information, including providing distances between different locations without the need to copy and paste them into the map one by one.

Copilot can also be used to solve math problems, and screenshots of charts and equations in PDF format can be solved in the automatically popped-up Copilot.

Copilot can also retrieve content from users' phones (such as text messages). For example, if a user wants to send a flight schedule to their family, Copilot will import the data onto the computer desktop as requested, and the information can even be sent without taking out the phone.

Nadella said that Copilot is an experience that spans across the Windows 11 operating system and Microsoft 365 productivity tool suite, which can understand users' background information, provide appropriate skills when needed, and adapt to personalized needs.

In terms of pricing, consistent with the news announced in July, Copilot has a monthly subscription fee of $30, an 83% increase compared to the previous Office 365, making it the company with the highest price increase in this round of generative AI wave.

Copilot will be rolled out on the Windows system next Tuesday, and the enterprise version will be fully open on November 1.

It is worth noting that Microsoft CFO Amy Hood informed Wall Street analysts two months ago that the financial impact brought by AI is not explosive but progressive, and it may be mainly reflected in the second half of the 2024 fiscal year ending in June 2024.

In other words, in the first half of 2024, the revenue growth brought by AI is expected to be reflected in Microsoft's financial report, providing more reference indicators for observers.

Microsoft's Performance is Expected to Rise by 24% in the Next Year! Wall Street is Bullish on Microsoft's Performance

Microsoft, which holds OpenAI, has always been considered one of the companies benefiting the most from the wave of generative AI.

Tyler Radke, an analyst at Citigroup, previously raised the target price for Microsoft to $425. He believes that Microsoft Copilot has tremendous potential. Even with a penetration rate of only 5%, this product can bring in at least $5 billion in incremental revenue for Office 365, close to half of the enterprise sales revenue ($9.4 billion) in the third quarter.

Dan Ives, an analyst at Wedbush, stated in his report on Thursday that the latest survey on Microsoft shows that the company's cloud computing division is "performing steadily," and the ability to monetize AI is just around the corner.

He believes that Microsoft Azure's revenue guidance may achieve high growth of 25%-26%, and part of this growth is driven by the popularity of AI.

In addition, he also believes that the Copilot tool can accelerate the customer penetration of Microsoft's AI services. He believes that over half of Microsoft's users will use Copilot within the next three years.

Ives wrote:

"Although management has talked about the 'gradual rise' of AI monetization in the 2024 fiscal year, our recent survey shows that the pace of AI application is faster than expected."

"Our view remains that cloud computing and the underlying Office 365/Windows ecosystem will occupy an increasingly larger share in Microsoft's future development, ultimately stimulating growth and profitability in the 2024 fiscal year."

Ives gave Microsoft a buy rating and a target price of $400, believing that the stock has a 26% upside potential in the next few months.

According to 34 research reports tracking Microsoft in the past 3 months, Wall Street analysts are very optimistic about Microsoft's stock performance, with an average 12-month target price of $392.41, indicating a potential upside of 24% in the next year.

HSBC Pours Cold Water: Microsoft's Stock Price Has Reached a Fair Level

However, HSBC recently pointed out that investors should be cautious about the impact of AI on various technology stocks.

Analysts pointed out:

"Although we see the prospects of artificial intelligence, the timing is still uncertain; however, the demand for cloud and digital transformation remains strong."

HSBC gave Microsoft a "hold" rating with a target price of $347, stating that although Microsoft has advantages and the ability to benefit from the AI boom, the valuation is already high.

They believe that the market is "overly optimistic about the short-term prospects of AI monetization":

"We estimate that Microsoft's recent and long-term operating performance is good, driven by the promotion of cloud computing, digital transformation, and the prospects of artificial intelligence. In the short term, Microsoft's business will continue to be strong, but the stock price has reached a fair level."