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Microsoft impresses analysts with new slate of AI technologies across key franchises

Published 2024-05-22, 03:57 p/m
© Reuters.  Microsoft impresses analysts with new slate of AI technologies across key franchises

Proactive Investors - Microsoft Corp (NASDAQ:MSFT) has impressed Bank of America (NYSE:BAC) analysts with its expansion of AI initiatives across its product suite as the technology giant kicked off its annual Build Developer Conference on Tuesday.

“While no singular announcement represents a material revenue catalyst for the upcoming Q4, we come away from the conference thoroughly impressed by Microsoft's steady innovation with AI across key franchises,” the analysts wrote in a note to clients.

They highlighted that Microsoft is taking its foundational AI platform – with Azure, Office (M365 copilot) and GitHub “well-understood core AI offerings” – to other key franchises such as Windows, Team, and Security.

The company has enhanced Azure’s data analytics capabilities by combining Synapse Real-Time Analytics and Data Activator into a new product called Real-Time Intelligence, the analysts highlighted.

“Real-Time Intelligence offers analytics and activator workloads and has additional features such as a low-code interface to help business users generate insights from data,” they wrote.

They also noted Microsoft’s introduction of the Fabric Workload Development Kit, a tool kit designed to help developers build their own applications within Fabric.

Further, Microsoft introduced Copilot Extensions, third-party add-ons, that give GitHub Copilot specific knowledge via connecting to databases, software development kits (SDKs), or application programming interfaces. It announced on Wednesday connectors with Azure, Teams, MongoDB (NASDAQ:MDB), and more.

GitHub also announced Copilot Workspace which allows developers to work with code in their natural language, designed to help developers with brainstorming, planning, writing out specifications, and executive tasks adjacent to coding.

“This offering could provide upside to our GitHub revenue estimate of $1.5 billion (up 42% year-over-year) for FY25,” the analysts pointed out.

“More importantly this could drive further adoption of AI-enabled applications running on Azure, which could drive upside to our estimate for FY25 Azure revenue of $99.7 billion (up 28% year-over-year) as we move through the year.”

Finally, the analysts highlighted Microsoft’s announcement of a new Surface laptop which leverages an Arm-based Copilot CPU to power AI features natively built into Windows.

“These new capabilities look promising and could provide a catalyst for our estimate for FY25 Windows OEM revenue of $3.8 billion (up 11% year-over-year),” they wrote.

The analysts reiterated their ‘Buy’ rating on Microsoft and a $480 price target. Shares traded hands at $429 on Wednesday afternoon.

“We continue to view Microsoft as a top pick in software, tangibly benefiting from AI,” the analysts concluded.

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