Microsoft’s new A.I.-powered CoPilot tool is expected to be a major revenue driver for the company, potentially bringing in around $14 billion in its first year alone, according to a report from Macquarie Equity Research. The estimate is based on the assumption that 10% of Microsoft’s existing corporate users will sign on for the product.
CoPilot 365 integrates ChatGPT-like functionality into Microsoft’s office productivity software suite, allowing users to automate office tasks and work on familiar apps through chat-like interactions. Beta testing for CoPilot has been available to businesses since March, and 600 of Microsoft’s largest customers have already been paying for the pre-rollout version.
Microsoft’s investment in OpenAI, the company behind the technology used in CoPilot, is expected to be recouped through the revenue generated from the tool. Microsoft invested $10 billion in OpenAI in January and has previously invested $3 billion in the A.I. startup. The profits Microsoft generates from using OpenAI technology in its own products are not believed to be restricted by any deal structures.
Since the announcement of CoPilot 365, shares of Microsoft have risen nearly 3%, indicating positive market sentiment towards the new tool. Macquarie estimates that Microsoft has approximately 382 million commercial users of its Office 365 product. If only 2.5% of those users decide to pay for the CoPilot upgrade, Microsoft could generate an additional $3.4 billion in annual revenue. If one in ten commercial users upgrade to CoPilot, Microsoft could see an additional $13.75 billion in annual revenue. If 20% of users upgrade, the potential revenue could reach an impressive $27.5 billion.
Given these projections and the positive reception from customers, Macquarie continues to have an “outperform” rating on Microsoft’s stock. With the potential for CoPilot to significantly boost Microsoft’s revenue, it is clear that the tool has the potential to revolutionize the way office workers operate, automating tasks and increasing productivity for millions of Microsoft users worldwide.
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