Perhaps the best place to be, in terms of marketing, is to be selling shovels in a gold rush. While you will never achieve the results that some will as a result of striking gold, you will instead get a piece of everyone who tries. You will be part of the backbone, and that is an enviable market position. Tech giant Microsoft (MSFT) is working to be in just that position, selling backbone shovels in the midst of an artificial intelligence (AI) gold rush. Investors were on board, as shares were up nearly 2% in Wednesday afternoon’s trading.
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Microsoft is currently working on a set of “universal protocols and tools,” reports note, that will improve agentic web operations that can be used across multiple AI platforms. This will prove welcome as the internet focuses more on AI tools in general. But with an increased focus on AI tools comes a key issue: advertising. More specifically, the issue of how to pay for advertising on AI tools comes into play. While there were standards once for display ads, and click-through rates, and similar systems, those tools really do not exist for AI systems…at least, not yet.
Tim Frank, Microsoft’s corporate vice president for AI monetization, noted, “We do not have conflicting interests about operating as a platform. We operate to help our customers succeed, and since that orientation aligns so well with this strategy, we think it’s true to us.”
Prices Can Go Down?
Microsoft also recently bucked a trend in a big way by cutting a price for once. This almost never happens any more outside of a short-term sale or the like. But Microsoft did indeed do that with its Xbox Game Pass system, cutting the price on two tiers.
Game Pass Ultimate will drop from $29.99 per month to $23.99 per month, while Game Pass PC will drop from $16.49 per month to $13.99. Essential and Premium, though, will remain unchanged. This comes with a bit of a caution, though, as the Call of Duty series will no longer be a day-one release. In fact, Game Pass players will have to wait nearly a year to get in on the latest releases.
Is Microsoft a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 35 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 13.29% rally in its share price over the past year, the average MSFT price target of $573.99 per share implies 33.08% upside potential.
