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Wedbush: Time for Microsoft to flex its AI muscles at Build conference

Published 20/05/2024, 11:02 pm
MSFT
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Microsoft's (NASDAQ:MSFT) Build developer conference is set to start this week, where the technology behemoth is expected to “flex its AI muscles” and showcase efforts on the PC and Windows segments.

Among other things, analysts at Wedbush expect the company Microsoft to further integrate Copilot into its consumer and enterprise products, including Excel, Teams, and Word, alongside new Surface products and Windows features.

The primary goal is to roll out more Copilot and AI features to boost subscriptions and improve integration within Microsoft's consumer base through new Surface laptops and Windows updates. This, according to Wedbush, marks the beginning of a new AI-driven PC refresh, which Microsoft plans to focus on over the next 12 to 18 months, targeting more consumers.

“With Build being a developer conference we expect a heavy focus on Azure and Microsoft's AI enterprise endeavors which along with OpenAI are leading the path on this AI Revolution,” analysts said.

Wedbush said last week marked a key moment for the AI revolution, as both OpenAI and Google (NASDAQ:GOOGL) revealed their latest AI technologies to developers and users. OpenAI caught attention with its innovative AI features, while Google, at their I/O event, unveiled several announcements demonstrating their own AI capabilities, which will be led by Gemini and new advancements in search technology.

“The spending on AI is unprecedented across the tech world and this is just the first phase of the AI Revolution playing out with a major missing piece in this AI puzzle coming from Microsoft and Nadella this week at Build and Apple at WWDC next month,” analysts said.

“Based on our recent work in the field we believe the next 3 years over 70% of its MSFT installed base will ultimately be on this AI driven functionality for the enterprise/commercial which changes the landscape for Nadella & Co going forward,” analysts added.

Wedbush believes that MSFT stock is yet to fully price in the upcoming cloud and AI growth. The company’s AI enterprise use cases are projected to drive more budget allocation in 2024/2025. The firm said its partner checks around Copilot deployments suggest this could add $25 billion-$30 billion to Microsoft's revenue by fiscal year 2025.

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