Wedbush's Ives Raises Microsoft Target To $425 On The Back Of 'Game-Changing' AI Monetization, Same Day Redmond Announces Two Custom Chips

Wedbush has raised the stock price target for Microsoft Corporation MSFT to $425, following significant progress in the company’s artificial intelligence division. 

What Happened: On Wednesday, Wedbush’s Dan Ives took to X (formerly Twitter) and said that they are raising the price target on Microsoft from $400 to $425. 

Microsoft’s Co-Pilot AI product was identified by Ives as a “game changer,” resulting in the reaffirmation of the company’s “OUTPERFORM” rating and spotlighting it as a “Top Pick” for 2024.

See Also: Blow For Nvidia? Baidu Reportedly Switches To Huawei For AI Chips, Ditching Its Long-time Supplier

Meanwhile, on the same day, the Satya Nadella-led company announced the development of two custom computing chips, joining other major tech companies in moving key technologies in-house amid the steep costs of providing AI services, reported Reuters. 

These chips are not intended for sale but will be used to power Microsoft’s subscription software offerings and its Azure cloud computing service.

The new Maia chip, introduced at the Ignite developer conference in Seattle, seeks to expedite AI computing tasks and underpin Microsoft’s “Co-pilot” service, which costs $30 per month for business software users and developers who wish to establish bespoke AI services.

Next year, Microsoft plans to offer Azure customers cloud services powered by the latest flagship chips from Nvidia and Advanced Micro Devices, the report noted. 

Microsoft’s second chip, Cobalt, is devised as an internal cost saver and a counter to its main cloud competitor, Amazon Web Services.

Why It Matters: The move comes amid a “brutal crunch” caused by a shortage of high-priced chips, essential for powering tools like OpenAI’s ChatGPT. 

Previously, Sam Altman, OpenAI’s CEO, predicted the shortage would ease as more companies introduce alternatives to Nvidia’s sought-after $40,000 H100 processors. 

Earlier this month, Chinese startup 01.AI, founded by Kai-Fu Lee, who headed Google in China, achieved a $1 billion valuation. 

At the time, it was also reported that despite the U.S. admin’s ban on Nvidia’s most advanced AI semiconductors to Chinese customers, Lee’s startup had stockpiled enough to fulfill its needs for the foreseeable future. 

Photo by Volodymyr Kyrylyuk on Shutterstock

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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.