Microsoft‘s (NASDAQ: MSFT) ambitious $70 billion acquisition of video game giant Activision Blizzard (NASDAQ: ATVI) has faced a series of regulatory obstacles since its very announcement. Concerns about monopolization led global regulators to scrutinize the deal, with the UK’s Competition and Markets Authority (CMA) initially considering blocking it entirely.
However, after extensive negotiations and concessions to prevent monopolization, Microsoft achieved crucial approval from the CMA on Friday, October 13.
With this milestone reached, questions arise about how this monumental acquisition might influence the MSFT stock price and the gaming industry at large. In this light, Finbold turned to the power of artificial intelligence (AI) and consulted OpenAI’s ChatGPT about the deal’s potential impact on Microsoft’s stock market performance.
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What did ChatGPT say?
The AI bot declined to offer specific stock price predictions, however, it did provide some analysis and factors to consider regarding the possible effect this blockbuster deal could have on MSFT.
First and foremost, the takeover of Activision Blizzard directly positions Microsoft as one of the leading companies in the gaming industry. As such, this could open an entirely new revenue stream for the tech giant, and hence, unlock fresh growth potential, ChatGPT said.
“The acquisition of a major player in the gaming industry like Activision Blizzard can lead to increased revenue for Microsoft. Gaming is a rapidly growing sector, and owning popular franchises like Call of Duty, World of Warcraft, and Overwatch can boost Microsoft’s position in the market. Investors often react positively to companies that expand their revenue streams.”
– ChatGPT wrote in the response.
Additionally, the deal could also “provide a significant boost” to Microsoft’s existing cloud gaming offerings, most notably the Xbox Game Pass and xCloud. This is because the buyout of Activision enables Microsoft to add a fresh mix of games to these services, “attracting more subscribers and generating steady, recurring revenue.”
“This could be seen as a positive signal for the stock, as it indicates the company’s adaptation to changing market trends.”
– the chatbot said.
While acknowledging that the impact of the Microsoft-Activision Blizzard deal can be positive, it could take some time for it to fully materialize, ChatGPT warned.
“The gaming industry is competitive, and it may take several quarters or even years for Microsoft to fully leverage its new assets. Investors will be looking for long-term strategic value.”
– ChatGPT added.
Meanwhile, Google Bard was more specific in his predictions, saying MSFT’s stock price has the potential to hit more than $400 by the end of 2023 after gaining approval for the Activision deal.
MSFT stock price analysis
At the time of publication, shares of Microsoft were standing at $331.16, down 0.38% in the past 24 hours.
The stock rose over 4.6% in the past 5 trading sessions, although it remains around 1.4% down on the monthly chart.
Year-to-date, the tech titan’s shares soared more than 36%, outperforming the broader S&P 500’s gains of 13.7%.
In conclusion, although Microsoft’s acquisition of Activision Blizzard could certainly have a positive impact on the stock price due to increased revenue and growth potential, it’s important to consider the risks associated with regulatory challenges, competition, and the successful execution of the integration.
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