Microsoft (MSFT) is adding artificial intelligence (AI) tools to its consumer “Microsoft 365” bundle and raising the subscription price for the first time since the product was first introduced in 2013.
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Microsoft has announced that it’s adding its Copilot AI assistant to the Word, Excel, PowerPoint, Outlook and OneNote applications for consumers who subscribe to its Microsoft 365 suite. Along with the new AI features, Microsoft is increasing the cost of the popular software bundle by $3 per month. The company said the price increase will “enable us to deliver new innovations for years to come.”
A personal Microsoft 365 subscription will now cost $9.99 per month and $99.99 per year, up from $6.99 a month and $69.99 each year. The Microsoft 365 Family plan, which can serve up to six people, will cost $12.99 per month and $129.99 a year, up from $9.99 a month and $99.99 per year.
AI Enhancements
Microsoft had 84 million consumer subscribers to Microsoft 365 last year, up 10% from 2023. Existing customers will see the new prices when their subscription renews, according to the company. Formerly known as Office 365, Microsoft 365 is an important source of recurring revenue for the company and is helping it compete with Alphabet’s (GOOGL) online productivity tools such as Gmail and Google chat.
In 2022, Microsoft increased prices on commercial Microsoft 365 subscriptions charged to businesses. In addition to bringing Copilot into the Microsoft 365 applications, consumer subscribers will gain access to Microsoft Designer, an AI image editing tool. For a limited time, existing subscribers can switch to 365 plans without Copilot or other AI enhancements.
MSFT stock has increased 10% in the last year.
Is MSFT Stock a Buy?
The stock of Microsoft has a consensus Strong Buy rating among 28 Wall Street analysts. That rating is based on 26 Buy and two Hold recommendations issued in the last three months. The average price target on MSFT stock of $506.96 implies 21.96% upside from current levels.
