Is Microsoft’s Copilot turning out to be a disappointment?

Microsoft (MSFT 0.69%) is one of the companies that has been at the forefront of the artificial intelligence (AI) revolution in the technology industry. It invested billions in OpenAI, the maker of ChatGPT, and added AI capabilities to its Office software. And the company promises to help business users save a lot of time with its Copilot virtual assistant, which will help people compose emails, assist with PowerPoint presentations and create formulas in Excel spreadsheets.

These all sound like time-saving features, but whether they’re enough to justify paying for a Copilot subscription is something I questioned early on. While these are nice features, they may not be necessary for businesses, especially when Copilot costs $30 per user per month.

There are rumors that business users are not impressed with the capabilities. If that’s the case, it could be a big problem for the highly valued tech stock.

Is Copilot just Clippy 2.0?

Microsoft released an office assistant called Clippy, represented by an animated paper clip, back in the 90s, but removed it after many users became frustrated with it. Clippy recognized when you were working on a resume or cover letter and offered to help. While technology has come a long way since then and there are a lot more Copilots and chatbots can do than Clippy, the idea isn’t that much different.

An unimpressed CEO is SalesforceMarc Benioff, who says, “Microsoft Copilot is basically the new Microsoft Clippy.” Benioff may, of course, be biased, given that his company wants to promote its own AI product, Salesforce Einstein.

Microsoft recently released a new wave of features for Copilot to help with collaboration, as well as agents that can help automate tasks. Is there anything out there that can prove to be a game changer for a business? It is still debatable.

Users can access many of the features offered by Copilot through ChatGPT or other chatbots, and in many cases no subscription is required. That’s why I’m a bit skeptical about Copilot, even with the release of new features.

Microsoft expects artificial intelligence sales to grow, but investors should temper their expectations

Last year, Microsoft said it could generate up to $10 billion in annual revenue from AI by 2026. While that’s a significant amount of money, investors should also remember that this company has sales of over $245 billion in the last 12 months. . An increase of $10 billion would represent a 4% increase in its top line.

In the early stages of AI, it may be easy for Microsoft to generate a lot of growth thanks to Copilot, but as companies have more time to evaluate it and other AI-related products emerge, that could change. I used Copilot and was not impressed with what it offered. I also think there is some truth to what Benioff is saying – that Copilot may just be another incarnation of Clippy.

Although Copilot has greater capabilities than Clippy, it may be difficult for companies to justify incurring large annual expenses for new features. There is no show that makes Copilot a must-buy for a business.

Microsoft actions may be due for a fix

Microsoft is a highly valued stock with a market capitalization of $3.2 trillion. At more than 36 times trailing earnings, investors are paying a high multiple for a business that could face increased competition in the future. While its sales are still growing, it may not be at a fast enough pace to justify such a large premium for the tech stock.

It’s too early to tell if Copilot will turn out to be a disappointment, but it wouldn’t surprise me if it did. This stock has gotten a little too hot lately. Unless you’re willing to buy and hold for a few years, you’re better off chasing more modestly priced growth stocks instead of Microsoft.