After a huge investment in AI infrastructure, Microsoft Corporation (MSFT.US) sounded the horn for AI monetization counterattack! Copilot is expected to usher in its outbreak.

Senior executive Judson Althoff of the American technology giant Microsoft Corporation (MSFT.US) told employees on Thursday that the exclusive Copilot artificial intelligence add-on product, which has faced fierce criticism in the market in recent months due to low adoption rates, has made more optimistic sales progress with large enterprise clients. The optimistic growth outlook for Copilot is crucial for Microsoft Corporation's currently weak stock price. The company is at a crossroads of two narratives that are hurting its valuation - on one hand, there is a surge in AI infrastructure investment, with concerns that massive capital expenditure will continue to erode free cash flow; on the other hand, there is a pessimistic logic of "AI disrupts everything" that is compressing software stock valuations. Software stocks, including Microsoft Corporation, have seen significant declines this year, with the core logic being market concern that generative AI models may intensify competition with SaaS software vendors. Microsoft Corporation's stock dropped 23% in the first quarter, while the company increased its investment in AI data center construction to serve large cloud computing clients like OpenAI. Investors are looking for signs that Microsoft Corporation, Amazon.com, Inc., and Oracle Corporation, among other cloud computing giants, can demonstrate that products enhanced by AI models will drive revenue and profit growth. In January of this year, Microsoft Corporation reported that they had sold 15 million seats of the additional paid Microsoft 365 Copilot on top of their commercial Office productivity software subscriptions, which equates to about 3% of the total seat count for standard bundled packages. Enterprise users of Microsoft 365 can use the limited functionality Copilot ChatAI chat Siasun Robot & Automation assistant. CEO Satya Nadella told analysts in an earnings call that the company has "several times" more enterprise users of the Siasun Robot & Automation product. The Microsoft 365 Copilot, priced at up to $30 per month, is set to be widely released in the second half of 2023. Many Wall Street analysts have described its adoption as still in the early stages. After disclosing the preliminary statistics in January, analysts from UBS Group AG, who had initially recommended buying Microsoft Corporation stock, expressed that they had expected more subscribers. According to internal meeting minutes reviewed by institutions, shortly after releasing financial results, Microsoft Corporation management received feedback from Wall Street analysts and subsequently adjusted their sales and development strategy. At a recent employee meeting, Microsoft Corporation's Chief Commercial Officer Althoff stated that salespeople had been working to secure paid versions of Microsoft 365 Copilot seats and encourage all users, including regular retail users, to actively use Copilot Chat. Following feedback from analysts on some of the information disclosed in January, Microsoft Corporation adjusted their sales model for selling Microsoft 365 Copilot AI productivity plugins to enterprise clients. Althoff stated that he and Chief Financial Officer Amy Hood had set very aggressive growth targets for the financial quarter ending on Tuesday in March. "Those targets have been achieved in the third financial quarter," Althoff stated in a media interview. The company has set new, more ambitious goals for the financial quarter ending in June. "I am actually very confident in these numbers," he said. One of Microsoft Corporation's AI revenue engines - Microsoft 365 Copilot, which requires additional payment from users Microsoft 365 Copilot, an additional paid license stacked on top of the commercial version of Microsoft 365/Office series office subscriptions, is not part of the standard M365 package. Microsoft Corporation's official stance is that users must first have an eligible commercial Microsoft 365 subscription before purchasing a Microsoft 365 Copilot license; the enterprise page shows a price of $30 per user per month. The main difference between the regular M365/Office series office software and Microsoft 365 Copilot is not just the presence of AI chat Siasun Robot & Automation, but whether it truly integrates with your Microsoft work data and deeply embeds in Office applications. The regular commercial version of Microsoft 365 now typically includes Copilot Chat for eligible enterprise users at no extra cost; it leans more towards auxiliary security AI chat Siasun Robot & Automation based on web information, supporting some file uploads, page processing, and AI agent capabilities but not deeply embedding into daily workflows. According to Microsoft Corporation's official explanation, Microsoft 365 Copilot goes further to provide exclusive advanced working context capabilities based on Microsoft Graph, enabling access to your work data such as emails, meetings, chats, documents, and seamlessly embedding it in applications like Word, Excel, PowerPoint, Outlook, and Teams, aiding in drafting, summarizing, analyzing, and generating content with the help of AI models. The optimistic growth outlook for Copilot is crucial for Microsoft Corporation's currently weak stock price. If Copilot sales continue to accelerate significantly, on the foundation of strong demand for Azure cloud-side AI training/inference resources and traditional cloud computing services, Microsoft Corporation will demonstrate that its massive AI investment can higher ARPU, stronger software add-on value, and more visible profit leverage. On the other hand, if adoption remains slow, then the market's assessment of Microsoft Corporation will be stuck in a framework of compressed AI expenditure, inadequate short-term returns, and even intensified competition at the base model level. In other words, Copilot is not just an added bonus in Microsoft Corporation's AI story, but one of the core AI revenue engines second only to the Azure cloud platform in the current stock price repair process. Microsoft Corporation and other American technology giants are at a crossroads of two alarming trends shaking up the tech sector As a long-time supporter of ChatGPT developer OpenAI, despite recording its worst quarter since the 2008 financial crisis by the end of March, Microsoft Corporation continues to expand its data centers for artificial intelligence, competing with Oracle Corporation, Alphabet Inc. Class C parent company Alphabet Inc., and Amazon.com, Inc. for dominance in cloud computing and absolute dominance in cloud-side AI training/inference platforms. According to the latest analyst expectations compiled by institutions, Amazon.com, Inc., along with Alphabet Inc. Class C parent company Alphabet, Meta Platforms Inc., Facebook's parent company, and Oracle Corporation, together with Microsoft Corporation, is expected to invest approximately $650 billion in cumulative AI-related capital expenditure by 2026. Some analysts believe that the overall expenditure may exceed $700 billion, indicating that year-over-year AI capital expenditure growth may exceed 70%. It is worth noting that these five American tech supergiants are expected to invest around $1.5 trillion in building incredibly vast AI computing infrastructure by 2023-2026. In comparison, the cumulative investment of these tech giants over the entire historical period until 2022 is around $600 billion. However, because these incredibly large AI expenditures will significantly reduce these companies' free cash flow and there is a lack of clear short-term returns and monetization paths closely connected to AI, investors are increasingly concerned. When will the massive investment in AI computing infrastructure start to bring more significant returns in revenue and profit growth, followed by the pessimistic narrative of "AI disrupts everything" causing investors worldwide to continue selling software stocks, including these five tech giants, leading to the continued slump in their stock prices this year, especially Microsoft Corporation's stock price declining by 23% in the first quarter of this year, recording its worst quarter since the 2008 financial crisis.