Shares of Microsoft (MSFT 1.57%) were up strongly on the day today, as much as 2.6% in early trading, before reverting to a still-solid 1.9% gain as of 1:55 p.m. ET.
The cloud and enterprise software giant received a positive analyst note Sunday, adding further optimism to the Microsoft story. That story has also seen several positive developments over the past week or so, setting up an interesting inflection point as we head into earnings.
NASDAQ: MSFT
Key Data Points
Artificial Intelligence (AI)-powered Copilot gaining traction
According to a Sunday note from analyst Brent Bracelin of Piper Sandler, Microsoft's recently announced Copilot feature for its Microsoft 365 software suite is gaining traction.
Back in July, Microsoft unveiled the new offering, which will cost an extra $30 per user per month for 365 users. Microsoft advertised the new feature would usher in a "whole new way of working," allowing users to accomplish many business tasks using only their own words. Microsoft is of course using large language models (LLMs) in the new product developed by its investee OpenAI, the company behind ChatGPT and into which Microsoft invested $13 billion through early 2023. Combining those capabilities with Microsoft's enterprise software, security, and cloud capabilities, companies can easily incorporate their own data in combination with Copilot in a secure manner.
Of note, Copilot has been in early-trial mode but is set for general release Nov. 1. According to Bracelin, who has been monitoring unique visits to the Copilot 365 trial website, traffic increased 181% between August and September, signaling interest and enthusiasm for the new offering. That sharp increase could signal enterprises are preparing to launch Copilot when it comes out next month.
As such, Bracelin raised his price target to $400 per share, a nearly 20% increase from today's levels, while also calling Microsoft his "highest-conviction stock" in the large-cap technology universe.
Microsoft is a core holding for any investors' portfolio
Thought by many to have an early lead in artificial intelligence among cloud giants, Microsoft also has a diverse portfolio of several highly profitable software franchises. Moreover, the company just closed on its $69 billion acquisition of video game studio Activision Blizzard last week, which could pave the way for additional earnings growth from the often-overlooked Xbox gaming platform.
With a credit rating higher than that of the U.S. government, Microsoft has an unmatched combination of defensive and offensive characteristics among any other stock in the market. That's why it remains a top software stock to own for the long term for just about any kind of investor.
