Microsoft (NASDAQ: $MSFT) stock has caught the attention of investors globally with its pivot to artificial intelligence.
The pivot to AI by Microsoft has paid off in a big way, and its stock is now surging. IN 1975, Microsoft was focused on the PC OS industry, which it dominated for years. It has since expanded into internet services, productivity software, server software, video gaming, and PC hardware.
Cloud Computing Performance
While Microsoft has enjoyed success in Cloud Computing, it remains behind Amazon. However, the company is quickly closing the gap. In Q2 2023, Amazon Web Services held 30% of the market share.
Microsoft came in a close second at 26%. Google Cloud was a distant third with 9% of the market share. Enterprise spending on cloud computing services went up to $72.4 billion in Q2 2023, according to a recent analysis.
Microsoft AI Performance
The company has made headway in artificial intelligence by incorporating it into its existing services. They shelled out $10 billion to acquire OpenAI in January 2023. OpenAI is the company behind ChatGPT and Dall-E, an image generator.
Since then, they have infused their cloud service with AI and other enterprise software products. In February, they added AI capabilities to Bing Search. Following the news, their stock jumped 4.2%.
Microsoft stock surged to $366.78 on July 18, which was a new record for the company. The surge was because of an AI-powered feature called Copilot added to their software services.
To use Copilot, customers will pay a $30-a-month fee for each Microsoft 365 Copilot user. The pricing was higher than predicted, a sign of the company’s trust in its AI features. A full release of the AI features will be in early 2024.
Microsoft Gaming Division Legal Problems
Microsoft has been trying to acquire Activision Blizzard, a game publisher, for a while now. However, the purchase has faced opposition from antitrust regulators.
The company planned to buy the gaming publisher for $68.7 billion in cash in January 2022. Thus far, the US FTC and the U.K.’s Competition and Markets Authority have opposed the deal. Microsoft is currently fighting both of these agencies.
Stock Performance
Microsoft beat analyst expectations in late July thanks to the growth of its cloud computing business. However, the company’s fiscal report revealed it would experience increased capital spending for its AI division. Following the report, its MSFT stock sank 3.8%.
In the quarter ending June 30, the company’s shares earned $2.69 per share for sales worth $56.2 billion. That was much higher than the predicted $2.55 per share on projected sales of $55.5 billion. Year-over-year, the company’s earnings rose 21% while sales rose 8%.
Microsoft predicts sales of $54.3 billion in the current quarter, which will end in late October. However, Wall Street predicts sales of $55 billion.
The September quarter earnings report, which will come out in late October, will be a huge catalyst for MSFT price movement. Additionally, the Microsoft Ignite conference, scheduled for November 14-17, could affect share performance as more AI news is divulged.
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