As an analyst with over two decades of experience covering major tech companies like Apple, Amazon, Google, and Facebook, I found Gene Munster’s insights on Microsoft’s future during his CNBC interview particularly enlightening. His prediction of Apple’s success, including the iPhone and AppleTV, has proven him to be a reliable voice in the tech world.
During an interview on CNBC’s “Fast Money”, well-known analyst Gene Munster shared his insights about Microsoft’s upcoming direction, emphasizing their aspirations in artificial intelligence and the transformation of their products within the technological marketplace
Gene Munster serves as a managing partner and co-founder at Deepwater Asset Management, an investment firm focusing on growth equity in public and private markets. Prior to establishing Deepwater, he spent more than two decades working at Piper Jaffray (now Piper Sandler) as a senior research analyst. During his tenure there, Munster gained recognition for his work analyzing prominent tech companies like Apple, Amazon, Google, and Facebook. He is best known for his accurate predictions about Apple’s prosperity, including the anticipated effects of the iPhone and AppleTV on their expansion into home entertainment
At Deepwater, Munster primarily concentrates on funding revolutionary technologies, such as artificial intelligence, augmented reality, and up-and-coming industries. They oversee various investment vehicles like a mixed public-private fund and an index tracking frontier technology
To start off, analyst Munster pointed out the initial expansion of Microsoft’s AI-driven “Copilot” tool, highlighting its enormous growth prospects despite being in its early stages. In his view, Microsoft’s Copilot service is merely touching the tip of the iceberg, with a projected 5 million users among the total 450 million Office users. He underlined that this limited user base should be taken into account when assessing the company’s recent optimistic remarks about the product
Munster posits that the key issue is whether Microsoft’s AI-enhanced offerings will provide enough worth to outweigh the substantial price hike for customers, from $100 to $360 per year. He thinks that while the value isn’t completely clear at this moment, he anticipates the company to address this through upcoming product enhancements, viewing the current phase as growing pains. Munster suggests that these growing pains will diminish in the future, and consumers will eventually grow enthusiastic about these AI functionalities as they advance and become more beneficial
During the analysis of Microsoft’s financial breakdown, Munster pointed out that while Azure’s growth might appear less captivating without the AI aspect, the emphasis on AI remains indispensable. He underscored that AI plays a pivotal role in the company’s recent expansion and anticipates this pattern to persist in the long term. Munster is of the opinion that we are in the embryonic stage of an AI-driven three- to five-year market upswing, and he is optimistic that AI will surpass the internet in terms of its transformative effects
Regarding queries about the value of Microsoft, Munster made clear that both Microsoft and Meta heavily rely on AI, with nearly all aspects of their businesses expected to be influenced by this technology in the future. Although he acknowledged that Meta has outperformed Microsoft, Munster emphasized that Meta is valued at a lower multiple compared to Microsoft, making it a more appealing investment considering valuation. He also mentioned that Deepwater Asset Management owns Meta but not Microsoft in its portfolio, demonstrating this perspective
Regarding Microsoft’s approach of requiring a subscription for its AI-enhanced digital assistant, Munster argued that it boils down to providing value. He drew an analogy with the rising cost of iPhones over time due to the increased value they offer, implying that if Microsoft’s AI tools can substantially boost productivity, consumers and businesses will be prepared to pay more. Munster endorsed Microsoft’s choice to levy an extra fee for their AI assistant, anticipating that this approach will prove profitable in the future
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2024-09-05 14:56