Microsoft Corp. shares snapped a six-session winning streak Wednesday even as bullish analysts chimed in with more cheers for the technology giant.
Analysts are encouraged by Microsoft’s
recent disclosures of pricing levels for artificial-intelligence offerings, which turned out to be higher than many were anticipating, in a potentially upbeat sign for the company’s revenue potential.
See more: Microsoft’s prices for AI tools positively surprise
“Microsoft made a major positive AI announcement by disclosing a $30 per-user per-month price point for its M365 Copilot product, a price point at the very high end of expectations, well above our $10-$15 per-seat estimate and at a level on par with many core Office 365” offerings, UBS analyst Karl Keirstead wrote Wednesday.
He titled his note to clients: “The Copilot Might Earn as Much as the Pilot.”
Keirstead rates the stock a buy with a $400 target price.
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Morgan Stanley’s Keith Weiss was similarly upbeat Wednesday, chiming in that the pricing “underscores the technology’s compelling value proposition to customers [and] supports the potential for more bullish Copilot contribution to the model in years ahead.”
He added that he also expects “another version of Copilot for the rest of the seats with [fewer] enterprise features, but at a lower price point, suggesting an incremental revenue opportunity.”
Weiss has an overweight rating and $415 target price on Microsoft shares.
Mizuho’s Gregg Moskowitz, meanwhile, boosted his price target on the stock to $420 from $390.
“While we were quite bullish on the Microsoft 365 Copilot opportunity…the pricing structure is even a little better than we were expecting,” he said.
The “cumulative incremental revenue” from Microsoft 365 Copilot by the end of fiscal 2023 could clock in upward of $9 billion, he added.
Microsoft shares ended Wednesday’s trading down 1.2%, after rising 8.3% across the six-trading-day winning streak that preceeded the session.
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