Microsoft hits all-time high after unveiling pricing for AI tool, Copilot
lcva2/iStock Editorial via Getty Images
Microsoft (NASDAQ:MSFT) shares popped more than 5% and hit an all-time high on Tuesday after the U.S. tech giant said that its artificial intelligence tools for its Office software, known as 365 Copilot, will cost $30 per user per month, significantly raising the price of the software.
Unveiled at its virtual Inspire conference, Microsoft (MSFT) said the $30 per user per month cost will be for its E3, E5, Business Standard and Business Premium customers. These customers have monthly plans that range between $12.50 and $57 per user per month.
Current E3 users pay roughly $36 per user per month for Office 365, effectively making Copilot an 83% increase for that tier of customers.
In an interview with the Financial Times, Microsoft (MSFT) CEO Satya Nadella said to think of Copilot as the "third leg" of Office after Word, Excel and Teams.
Wedbush Securities analyst Dan Ives called the pricing information as "very bullish" and could allow Microsoft (MSFT) to boost cloud revenue annually by 20% by 2025.
"This would significantly increase list prices for MSFT on the commercial front and in our opinion penetration would be significant over the coming years around AI within its installed base," Ives wrote in an investor note. "We believe over the next 3 years over 50% of its MSFT installed base will ultimately be on this AI functionality for the enterprise/commercial which changes the game for [CEO Satya] Nadella & Co."
Amid concerns about the steep price hike, Copilot is a voluntary upgrade, Microsoft added at the conference. Microsoft has been testing Copilot with at least 600 customers since being unveiled in March.
In addition, Microsoft (MSFT) unveiled a more secure version of its Bing search engine chatbot, Bing Chat Enterprise. The consumer version was unveiled in February, along with an AI-powered Edge after the company's "multi-billion" dollar partnership with ChatGPT creator, OpenAI.
Redmond, Washington-based Microsoft (MSFT) also said it had expanded its artificial intelligence partnership with Meta Platforms (META) and LLaMA 2, Meta's large language model and make it available on Azure and Windows.
More on Microsoft and AI

Microsoft: Still The Cornerstone Of A Great Portfolio
Microsoft dips as Bernstein says Copilot AI is going 'everywhere'
Tech has had a strong start to 2023. That bodes well for the rest of the year.