A bit of a surprise for you as you enter your weekend: somewhere around 20% to 30% of Microsoft’s code in “repos”, according to CEO Satya Nadella, is written by artificial intelligence (AI). This is, perhaps, not quite as surprising as it could be—at Meta Platforms (META), it is actually closer to half—but it still made investors take notice. Shares of Microsoft gained nearly 2.5% in the closing minutes of Friday’s trading.
While at LlamaCon, Nadella noted the figure in question, and noted that that number was not standing still, either. In fact, the proportion of code written by AI was on the rise, with Nadella believing that code might hit as high as 40% at some point. Nadella noted that AI does better writing brand new code than it does modifying old code, which at least suggests that some of Microsoft’s coders will be able to keep their jobs.
Interestingly, neither Nadella nor Mark Zuckerberg, who was also on hand, were willing to talk about job losses that might stem from having machines write your software for you. Though they did bring up the notion of “evolving roles,” where coders become less like coders and more like managers, dispatching their little armies of AI drones to do various tasks. Whether or not Microsoft or Meta would need the same numbers of these new managers, however, came up.
Xbox Series Pricier
Meanwhile, console gamers will be disturbed to note that, as we wait for the next generation of console gaming to arrive, the current generation of console gaming will actually get more expensive. Normally, as hardware ages, it gets cheaper. But Microsoft, citing increasing development costs, noted that Xbox hardware would get more expensive.
The Xbox Series S, the simple, entry-level model, will see its price raised from $299.99 to $379.99. The Series X, meanwhile, will go from $499.99 to $599.99. Controllers and other peripherals are also on the rise, and some games will start at $80 starting this holiday season. Microsoft noted that it understood that “…these changes are challenging,” noting that “market conditions” forced their hand.
Is Microsoft a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 30 Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 7.29% rally in its share price over the past year, the average MSFT price target of $506.31 per share implies 16.4% upside potential.
