Microsoft Ignite is positive for Microsoft, Oracle and others: Piper Sandler

Microsoft (NASDAQ:MSFT) kicked off its annual Ignite conference this week, unveiling new ai chips and updates to its overall ai strategy. While Piper Sandler called the conference “net positive” for the Satya Nadella-led company, it had positive ramifications for several other technology companies.

Analyst Brent Bracelin said Microsoft (MSFT) showing off its new Maia and Cobalt chips “alleviated” investor fears that it could be constrained by supply chains, as well as any issues with long-term margins.

“These silicon accelerators designed specifically for large-scale data centers had an interesting twist,” Bracelin wrote. “Microsoft also plans to resell Azure Cobalt CPUs to other cloud providers starting next year.”

Bracelin also called Microsoft 365 Copilot “hot,” as enterprise interest in the ai ​​product is “encouraging.” He noted there have been “substantial” commitments from companies including Accenture, BP, Dow, Honda, KPMG, Pfzier and Visa.

Bracelin cited a survey of “a large base” of Microsoft 365 Copilot users that showed 64% spent less time processing email, 70% were more productive, and 77% would prefer Copilot to a free weekly lunch, saving an average of 4.8 hours per month. .

“Based on a salary of $80,000 per year, this would equate to about $192 per month in time savings for a product with a list price of $30 per month,” he explained.

Despite the positive sentiment around the new chips and enterprise adoption of Microsoft 365 Copilot, Bracelin said there is some negativity around Copilot for small and medium-sized businesses. The comment suggests that Microsoft “missed the mark” with a high minimum initial seats of 300 or more.

“On the other hand, there appears to be pent-up demand for the M365 Copilot on SMB once the lows clear,” added Bracelin, who has an Overweight rating and a $425 price target on Microsoft (MSFT).

Other beneficiaries

Oracle (New York Stock Exchange:ORCL), asanas (New York Stock Exchange:ASAN) and monday.com (NASDAQ:MNDY) also benefited from the conference for a variety of reasons, Bracelin said.

For Oracle (ORCL), Bracelin said it is positive that the first Oracle Cloud Infrastructure or OCI Exadata cluster within Azure will be available in December. Additionally, there are plans to install Exadata in several regions in the first quarter of next year. Bracelin also noted that companies like Pepsi (PEP), Voya, and Vodafone (VOD) are early adopters of Oracle on Azure.

Bracelin has an Overweight rating and a $130 price target on Oracle (ORCL).

Earlier this month, Oracle (ORCL) and Microsoft (MSFT) signed an agreement whereby Microsoft (MSFT) will use OCI’s ai infrastructure, along with its own Azure ai infrastructure, to infer ai models.

Asana (ASAN) and monday.com (MNDY) are likely to get a “slight” positive, as the new Microsoft Planner product was not as bad as feared for the competition. Bracelin said the product has been disappointing since its launch in 2016 and the timeline laid out at Ignite “suggests that a full web-based product may not be available until late 2024.”

Bracelin has an underweight rating and $16 price target on Asana (ASAN) and an overweight rating and $200 price target on monday.com (MNDY).