- Microsoft stock surged as much as 6% on Tuesday after the company unveiled an AI subscription for its Office 365 platform.
- The software giant will charge $30 per month per user to have AI capabilities integrated into its Microsoft Office platform.
- At its peak on Tuesday, Microsoft added $154 billion to its market value, which is bigger than Morgan Stanley.
Microsoft stock soared as much as 6% on Tuesday after the company unveiled a new product offering for its Microsoft 365 business users.
The company launched Copilot, its artificial intelligence-powered set of capabilities that integrate into Microsoft's suite of its 365 software offering, which includes Word, Powerpoint, Excel, and Teams, among other offerings. The company will charge $30 per month per user to have the AI-powered Copilot added to its software offering.
Investors cheered the move and the company's apparent pricing power, with Microsoft stock adding as much as $154 billion to its market valuation at its peak on Tuesday. That one-day gain is bigger than the entire valuation of Morgan Stanley, Intel, Honeywell, and about 450 other S&P 500 companies.
For Microsoft customers that purchase the Copilot add-on for $30 per month, it could represent a near doubling in price for those that use Microsoft 365 E3, which costs $36 per month. But more users of Microsoft's 365 Business Standard, the addition of Copilot represents a near tripling in price, as the plan costs just $12.50 per month.
Microsoft says the AI-powered Copilot offering will help its users quickly summarize documents, compose emails, and speed up analysis tasks within Excel. And so far, customer reception has been positive, Microsoft said.
"We're learning that the more customers use Copilot, the more their enthusiasm for Copilot grows. Soon, no one will want to work without it," Microsoft's head of consumer marketing Yusuf Mehdi said in a blog post.
Wedbush analyst Dan Ives sees a blue ocean opportunity for Microsoft to monetize its AI offerings, as it has a headstart relative to other companies and a massive installed base to tap into.
"We believe over the next three years over 50% of its Microsoft installed base will ultimately be on this AI functionality for the enterprise/commercial which changes the game for Nadella and company," Ives said in a Tuesday note.
Microsoft's AI ambitions were supercharged earlier this year when the company purchased a 49% stake in OpenAI for $10 billion. Since then, the company has integrated AI capabilities into its Bing Search engine, and the recent launch of Copilot for Office 365 continues that trend.
Microsoft stock hit a record high of $366.78 in Tuesday trades and was on track to close at its highest level ever.