Microsoft rises as Wedbush says AI is taking hold, ChatGPT 'changes the game'
Jean-Luc Ichard
Microsoft (NASDAQ:MSFT) shares rose more than 1% in pre-market trading on Tuesday as Wedbush Securities said the artificial intelligence revolution is taking hold and the company's integration of ChatGPT technology "changes the game."
"We strongly believe the first step for MSFT was Azure/Office 365 with the next step ChatGPT/AI monetization on both the consumer and enterprise fronts combined adding $40 to $50 per share to MSFT's sum-of-the parts valuation," analyst Dan Ives wrote in an investor note published late on Monday.
Ives said that Nvidia's (NVDA) recent "jaw dropping guidance" is a direct barometer for Microsoft (MSFT) and recent checks show that the company's monetization opportunity is happening "much sooner" than Wall Street expected, as recent checks with customers, partners and field checks have shown the company is in the driver's seat when it comes to monetizing AI in the cloud. 
"We estimate for every $100 of cloud Azure spend with MSFT the last few years there is an incremental $35-$40 of AI spend that now is on the table which changes the game and [total addressable market for CEO Satya] Nadella & Co. looking ahead," Ives added.
Ives also noted that there will be other beneficiaries as the AI market expands to what's believed to be worth $800B over the next 10 years, including Google (GOOG) (GOOGL), Amazon (AMZN), Oracle (ORCL), Palantir (PLTR) and Salesforce (CRM).
The analyst, who boosted his Microsoft (MSFT) per-share price target to $375, also noted that ChatGPT, which has been expanded into several of the company's products and services in recent months, is likely to be the next "leg of the growth stool" and help grow revenue and margins over the next fiscal year.
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