During a media event at its worldwide headquarters in Redmond, Washington, the tech giant outlined plans for its AI-focused investments for Bing, sending shares up.
Following its confirmed plans to grow its investment in OpenAI, an artificial intelligence group formed by Elon Musk, Microsoft stated it would include AI into its Bing search engine as it seeks to challenge market leader Google in the worldwide search and ad sector.
Microsoft stated that the multibillion-dollar investment, its third in the group, will expand its relationship with OpenAI and its major consumer and commercial product, the ChatGPT chatbot.
This is Microsoft’s third investment in OpenAI, following a $1 billion infusion in 2019 and a smaller investment in 2017. According to some media sources, the ChatGPT could be used in a new version of Microsoft’s Bing search engine.
Meanwhile, Alphabet (GOOGL) launched a pilot version of an AI-based application named ‘Bard’ on Monday, posing its own threat to ChatGPT.
“This technology will change almost every software category,” Satya Nadella, CEO, stated.
“With Google aggressively defending its turf on the search front with its own beta AI tool named Bard, Microsoft is aggressively going after the AI opportunity on both the cloud front and the search frontier,” said Wedbush analyst Dan Ives, who rates Microsoft as ‘outperform’ with a $280 price target.
“We see this as the first shot across the bow in this Big Tech AI competition, which is poised to ramp up in the coming months with Microsoft already dominating the race,” he added. “While Bing now holds approximately 9% of the search market, further incorporating this unique ChatGPT tool and algorithms into the Microsoft search platform could result in significant share changes away from Google and towards Redmond in the future.“
On January 25, Microsoft reported better-than-expected December quarter earnings of $2.32 per share, as revenues rose 1.9% year on year to $52.7 billion for its fiscal second quarter, but forecast current-quarter sales for its intelligent cloud division of between $21.7 billion and $22 billion, which fell short of Refinitv forecasts.
Investors initially applauded Microsoft’s December quarter results, notably income from Azure, its flagship cloud subsidiary, which increased 31% year on year and exceeded Street projections. However, the growth rate for that segment has slowed after a recent surge in the mid to high 40 percent area as corporations cut back on digital infrastructure spending.
CFO Amy Hood stated that Microsoft’s customers were “exercising caution” in terms of business expenditure, adding that growth “continued to decelerate, particularly in December, and that the company ended the quarter with Azure constant-currency growth in the mid-30s.“
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