Technology bulls pushed higher Tuesday after another positive data point in the ongoing artificial intelligence story. The Nasdaq 100 closed at 15,841, a gain of 0.8%, states Jon Markman, editor of Strategic Advantage.
Shares of Microsoft (MSFT) finished at a record high following the announcement of Copilot, its artificially intelligent assistant for the Office productivity programs. The Office software suite is the gold standard among enterprises, with a 48% market share in 2022, $63.4 billion in sales, and 345 million licensed subscriptions.
CNBC reported that Copilot will carry an additional $30 monthly subscription fee. For some enterprises, subscription costs would swell by 84%. Depending on the success of Copilot the AI is likely to have a material positive impact on sales and profitability moving forward.
More importantly, the cost of Copilot reinforces the larger AI story. Product managers at Microsoft released the software in March to 600 corporations. Chief technical officers at those firms must have a good idea of what the software can do, and if the price is appropriate.
Traders concluded Tuesday that there is a real demand for AI applications, and the size of the potential marketplace is being significantly underestimated. Microsoft shares surged Tuesday by 4%, taking the NDX along for the ride higher.
Microsoft is the most heavily weighted issue within the NDX, at 4.5%. With every positive AI story, and each advance for the NDX, bears move closer to conceding a rally to 16,573, a test of the record high. Nearness creates gravitational pull.
After a while, traders simply begin to believe that the rally will happen, so it does. Expect every decline between now and then will be shallow. Key support is 15,200, the rising 20-day moving average.
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