Some companies that buy AI chatbots for their employees are beginning to look for cheaper or free alternatives. This may help explain a slight decline in the number of companies using paid AI tools, such as ChatGPT. According to Ramp, a payments startup that tracks spending across over 30,000 businesses, the percentage of its customers spending on AI products dipped slightly from 42.5% in May to 42% in June. Ramp economist Ara Kharazian noted that this is the first decline in AI-related spending since early 2023.
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Even though some firms are canceling chatbot subscriptions like ChatGPT, spending on other AI tools, such as APIs for running custom models, continues to rise. In fact, overall corporate spending on AI is still growing and helping companies like Microsoft-backed OpenAI (MSFT) and Anthropic surpass their revenue targets. However, more businesses seem to be choosing free chatbot options. For example, Google (GOOGL) now includes its Gemini chatbot in Workspace apps by default, and Microsoft provides basic Copilot chatbot features at no extra cost to many business users, while charging extra only for premium Office 365 integration.
This shift toward lower-cost or bundled services could explain why some companies are dropping paid chatbot subscriptions in favor of these options. OpenAI has responded by offering discounts to firms that also use its APIs, and Microsoft has done the same for clients who spend more on Azure cloud services. Despite this, OpenAI claims that it added one million new paying business users since February. Kharazian said that the slight dip may be due to seasonality or contract renewals, and he believes AI spending will continue rising.
Is MSFT Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 32 Buys and three Holds assigned in the last three months. Furthermore, the average MSFT price target of $532.39 per share implies 6.2% upside potential.
