Microsoft strengthens AI empowerment, with unlimited potential for future performance.

Source: Tianfeng Securities Kong Rong, Li Zeyu

Microsoft, in deep cooperation with OpenAI, has not only launched the Bing Chat feature in its search engine, but also quickly launched a series of Copilot products, deeply revolutionizing its enterprise software and productivity software:

On March 8th, Microsoft released Dynamics 365 Copilot, which provides AI tools for employees in sales, customer service, marketing, operations, and supply chain roles within organizations. It automates a variety of tasks in CRM and ERP. By integrating CRM and ERP systems, Dynamics 365 Copilot can help customers accelerate innovation and increase revenue from various business perspectives.

On March 17th, Microsoft released Microsoft 365 Copilot, which combines the powerful capabilities of large language models (LLMs) with business data and Microsoft 365 applications to help users unleash creativity, unlock productivity, and upgrade various skills. Currently, Microsoft is testing Microsoft 365 Copilot with some commercial customers.

On March 28th, Microsoft released Security Copilot, which applies AI technology to the field of network security, providing security professionals with an effective tool to quickly detect and respond to threats and better understand the overall situation of vulnerabilities.

All product businesses benefit

Although the pricing of Microsoft's enterprise software Dynamics, 365, and Security has not been announced at the time of release, considering the productivity and efficiency improvements brought by the Copilot series, its ARPU () is expected to increase significantly.**

Microsoft's cloud computing business competition is expected to benefit deeply from the continuous improvement of the competitive landscape. Azure can continue to gain market share as customers may continue to choose Azure computing structures-from cloud to edge. Leading AI companies such as OpenAI, NVIDIA, Adept, and Inflection are using Azure to train large models.

We are optimistic about Bing's business under generative AI, and it will simultaneously expand in multiple channels such as the web, Windows, and mobile, and gain a larger market share.

Investment advice

Tianfeng Securities stated that considering the AI empowerment of Microsoft products, we continue to be optimistic about the long-term performance of Microsoft's technology stack and strategy in the enterprise and personal consumer markets, and maintain a "buy" rating.

The revenue forecast for fiscal years 2023-2025 has been raised from USD 220.9/245.7/271.6 billion to USD 223.4/262.7/314.8 billion, and the net profit attributable to shareholders forecast for fiscal years 2023-2025 has been raised from USD 76.7/88.6/106.5 billion to USD 78.4/100.4/136.3 billion. Among them, it can be seen that Microsoft's financial targets for 2024-2025 have been significantly raised.