Microsoft's Pace Of Integration Of ChatGPT Across Portfolio Impresses Analysts

  • Piper Sandler analyst Brent Bracelin maintained Microsoft Corp MSFT with an Overweight and raised the price target from $247 to $290 on untapped AI potential using a higher multiple.
  • OpenAI's ChatGPT has captured the world's attention in 60 short days, thanks to the novel and disruptive role of AI transformer models. 
  • The biggest surprise to the analyst relative to the new AI-powered Bing conversation engine is the pace at that AI transformers got integrated across the entire portfolio. 
  • Share gain potential in a $500B+ digital ad market is enticing, but AI disruption has far-reaching potential across consumer and enterprise segments. 
  • Bottom-line, it took about nine years for Microsoft Cloud to reach $40B+, and the analyst thinks it plausible for Microsoft AI to reach $40B + in half the time. 
  • Long-term margin could also remain intact, assuming capex is slightly higher.
  • Mizuho analyst Gregg Moskowitz maintained a Buy and raised the price target from $280 to $300.
  • MSFT announced a new AI-powered version of the Bing search engine and Edge browser and held an investor call. 
  • The new AI enhancement enables Bing and Edge to provide an interactive searching and browsing experience with better search results and chat functions. 
  • Microsoft also underscored a vast opportunity in the digital advertising market and expected revenue and operating income improvement as usage grows. 
  • The analyst saw broad AI applicability across consumers and enterprises, meaningfully influencing the narrative later this year, earlier than expected.
  • Price Action: MSFT shares traded lower by 0.28% at $266.80 on the last check Wednesday.
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