The past year or so has been an exciting time to be a Microsoft (MSFT 1.21%) shareholder. The company was quick to recognize that advances in artificial intelligence (AI) would be game-changing, and it made a number of bold moves to position itself at the forefront of this technological shift.
Chief among those was the development of Microsoft Copilot, a suite of generative AI tools that integrate seamlessly into the company's other products and services, allowing people to automate an array of time-consuming tasks and helping them to be more productive.
These digital assistants are at the heart of Microsoft's new collection of AI-centric PCs, which the company just unveiled at its Build 2024 developer conference. Early reviews have been stunning.
Here are three of the biggest upgrades in Microsoft's newest devices.
Image source: Getty Images.
1. Neural processing units
Microsoft's new Copilot+ PCs are endowed with the company's most advanced architecture yet, which brings together a central processing unit (CPU), a graphics processing unit (GPU), and a neural processing unit (NPU). The NPU, combined with over 40 on-device AI models, is designed to run a host of AI functions locally -- without having to interact with the cloud.
The company says that its Copilot+ PCs "have the most powerful NPUs in the PC category today," capable of performing over 45 trillion operations per second (TOPS), helping support new AI functionality in its devices. Microsoft asserts that its Copilot PCs "are up to 20x more powerful and up to 100x more efficient for running AI workloads and deliver industry-leading AI acceleration." The company also promises "all-day battery life," thanks to the NPU's power efficiency.
2. New AI experiences
Having the zippiest processing around wouldn't mean much if there weren't a flurry of new features to entice the user's imagination, and Microsoft didn't disappoint.
Have you ever been stymied while looking for something you know is on your computer, but you simply can't find it? One of the more promising new features is dubbed Recall Instantly. Microsoft says the feature "feels like having photographic memory." It can help users find documents, applications, websites, and more. By capturing and indexing what's on your screen, Recall can search for things with a simple prompt.
Creative types will appreciate Cocreator, an AI-powered image-generation tool integrated with Paint. Artists can combine digital brush strokes with text prompts that describe what they want to compose, and Cocreator will do its best to lend them a helping hand. The tool also allows you to revise, refine, edit, and tweak its output until you're satisfied with the finished product.
Another handy feature is Live Captions. This on-device translation tool can listen to speech in more than 40 languages and translate what is said into English captions in real time.
These and other AI-powered tools promise to make the new Copilot+ PCs more useful.
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Key Data Points
3. Copilot
Naturally, Copilot+ PCs come equipped with Microsoft's AI-powered digital assistant, which users can summon with a tap of the Copilot key.
Microsoft also announced that Copilot was getting an upgrade courtesy of OpenAI's GPT-4o, which was released just last week. This will allow Copilot to interact with users via text and voice commands, but users can also upload videos, photos, and screenshots to get answers to related questions.
This means that Copilot will be imbued with all the capabilities of GPT-4o, which offers greater speed and performance than its predecessors.
Is Microsoft stock a buy?
While Microsoft was quick to grab the AI opportunity, the competition is ramping up. However, with its AI-powered Copilot+ PCs, Microsoft has once again seized the high ground. The company isn't wasting any time: The new Copilot+ PCs will be available from Microsoft's biggest computer partners beginning on June 18, as will some Copilot+ Surface devices.
Microsoft stock has risen by 77% since the beginning of last year, more than twice the gain of the S&P 500. That isn't surprising since the stock has surged by 970% over the past decade, far outpacing the 182% gains of the broader market. Likewise, its total return of around 1,160% over that decade dwarfs the index's total return of 241%.
That said, Microsoft stock is still relatively inexpensive, trading at a valuation of 36 times forward expected earnings. While that's a premium to a multiple of 27 for the broad market index, Microsoft's track record shows why it's deserving of a premium.
That, combined with the significant opportunity represented by AI, helps illustrate why Microsoft stock is a buy.
