Why Microsoft's AI assistant gives the tech giant a new edge in AI race

Published Wed, Nov 1 20232:47 PM EDT

Microsoft 's (MSFT) new AI assistant tool should help the software giant solidify its lead among its Big Tech peers in the race to dominate artificial intelligence. On Wednesday, Microsoft started officially selling 365 Copilot , an AI add-on for its suite of Office applications used by businesses. The tool, which was first announced in March, integrates generative AI into core productivity apps like Word and Excel for a monthly cost of $30 per person. The assistant tool can help users prepare Word documents and PowerPoint presentations, rank and sort emails, analyze spreadsheet data, and summarize meetings. "It's certainly an incremental positive near-term and stands to be more material longer term. We'll see how fast adoption takes place, but you could certainly see a snowball effect," said Zev Fima, a portfolio analyst at the Investing Club. He added: "From a skills perspective, this should allow less-advanced workers to close the gap faster and allow more-experienced ones to be more productive and potentially less error prone." MSFT YTD mountain Microsoft (MSFT) year-to-date performance Copilot is Microsoft's latest in a series of moves over the last year to integrate AI into its offerings. Earlier in the year, Microsoft launched a new version of its Bing search engine that incorporates technology stemming from OpenAI's ChatGPT. Microsoft has invested roughly $13 billion in startup OpenAI. ChatGPT's large language models are also at the core of Copilot. And Wednesday's general launch of the AI assistant tool should set the stage for the company to develop yet another recurring revenue stream, shoring up sales amid its ongoing investments in AI. Microsoft last week delivered stellar fiscal first-quarter results that demonstrated the firm's AI prowess, in its biggest earnings beat in over two years. During the the company's post-earnings conference call last Tuesday, CEO Satya Nadella said he was already seeing strong engagement with the Copilot tool, with around 40% of Fortune 100 companies using the product as part of an invitation-only, early-access program. "Customers tell us that once they use Copilot, they can't imagine work without it," Nadella said. Wall Street is optimistic, too. Piper Sandler on Sunday said that Microsoft could be having its "iPhone moment," comparing Copilot's rollout to Apple's (AAPL) iPhone launch in 2007. Analysts at the firm forecasted that the AI tool could generate more than $10 billion in annualized revenue for the company by 2026. Microsoft stock, up more than 43% year-to-date, rose 1.89% Wednesday afternoon, to trade at $344.50 a share. (Jim Cramer's Charitable Trust is long MSFT, AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

The Microsoft logo at the Digital X Internet Congress in the Media Park in Cologne, Germany, on Sept. 20, 2023.

Picture Alliance | Picture Alliance | Getty Images

Microsoft's (MSFT) new AI assistant tool should help the software giant solidify its lead among its Big Tech peers in the race to dominate artificial intelligence.