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Microsoft’s AI Boost: Skyrocketing Market Value Follows Launch of New AI Subscription

Microsoft shares enjoyed a bullish boost on Tuesday, climbing as much as 6% following the announcement of a new AI-driven product for its Microsoft 365 business users.

The tech giant introduced Copilot, an artificial intelligence-infused capability set that integrates seamlessly into Microsoft 365’s suite of software services, including Word, PowerPoint, Excel, and Teams. Copilot comes at a cost of $30 per month per user, marking an exciting addition to Microsoft’s software offering.

The market’s response to the move was overwhelmingly positive, as investors applauded the company’s evident pricing leverage. Microsoft’s market valuation swelled by a staggering $154 billion at its Tuesday peak—a one-day gain that surpasses the entire valuation of notable companies such as Morgan Stanley, Intel, Honeywell, and around 450 other S&P 500 enterprises.

For customers who opt for the Copilot add-on, the cost might nearly double for those using Microsoft 365 E3, currently priced at $36 per month. For users of Microsoft 365 Business Standard, which costs $12.50 per month, the inclusion of Copilot may nearly triple the cost.

Microsoft argues that the new AI-fueled Copilot will enable users to swiftly summarize documents, compose emails, and expedite analysis tasks within Excel. Customer response, according to the company, has been favorable thus far.

The company’s head of consumer marketing, Yusuf Mehdi, commented in a blog post, “The more customers use Copilot, the more their enthusiasm for Copilot grows. Soon, no one will want to work without it.”

Dan Ives, a prominent analyst, sees a significant opportunity for Microsoft to monetize its AI capabilities, given its head start and vast installed base.

Ives asserted that “over the next three years, over 50% of its Microsoft installed base will ultimately be on this AI functionality for the enterprise/commercial which changes the game for Nadella and company.”

Microsoft supercharged its AI ambitions earlier this year when it acquired a 49% stake in OpenAI for a cool $10 billion. This investment has allowed Microsoft to incorporate AI capabilities into its Bing Search engine and continue that trend with the recent launch of Copilot for Office 365.

Tuesday’s trades saw Microsoft stock reaching a record high of $366.78, setting the stage for a potential highest-ever closing level. The unveiling of Copilot underscores Microsoft’s continuous innovation and strategic growth, solidifying its stance as a leader in the dynamic tech landscape—a critical note for savvy entrepreneurs and investors.