Why Microsoft is betting big on AI

AI Basics

Arguably, no big company has the strongest association with artificial intelligence (AI) these days. microsoft (MSFT -1.28%).

Windows owner OpenAI made headlines after the $10 billion investment startup OpenAI launched ChatGPT three months ago.

All big tech companies are working on some form of AI technology, but Microsoft seems to be the most aggressive at the moment. The company has already launched a new version of his Bing search engine that integrates ChatGPT technology into search, improving responses and allowing follow-up questions. It also incorporates Windows, Azure cloud infrastructure services, and its technology into other products. Edge web browser.

CEO Satya Nadella seems to revel in the potential of AI to turn the tables on markets such as search, calling it the next major computing platform and has been at every turn over the past few months. I am enthusiastic about the possibilities.

The chart below helps explain why Microsoft is pouring billions of dollars into artificial intelligence so aggressively.

A chart showing Microsoft's revenue streams.

Image Source: The Motley Fool.

As you can see, Microsoft has various revenue streams. In fact, the company is one of the most diversified large technology companies, generating revenue from a wide range of products, including an Azure-led cloud business, the Office software suite, and the Windows operating system. However, the company also makes significant revenue from businesses such as games via Xbox, LinkedIn professional social networks, search and news revenue from Bing and others, enterprise computing services, and devices like Surface tablets.

This broad revenue engine gives the company many potential applications for its AI and ChatGPT technology, and Azure provides the computing power to run them. Additionally, the company has a built-in enterprise customer base eager to use such tools.

Azure is the key

behind Amazon Web Services (AWS), Microsoft Azure is the world’s largest cloud infrastructure business, and Azure AI is purposely built to run large-scale AI models.

Microsoft describes it as using a unique architectural design that combines the fastest graphics processing units (GPUs) to “enable the training and inference of AI models at scale.”

Nadella has called AI the new race in tech, and when discussing the potential of search, he said the industry’s gross margins will continue to fall, alluding to a contest of computing power. doing. A scalable infrastructure is in place.

How Microsoft is applying AI

Microsoft customers can leverage AI tools for a wide range of applications. For example, enterprises can build machine learning models using Azure Machine Learning, a suite of tools designed for end-to-end deep learning.

Microsoft 365, a comprehensive productivity platform, empowers Microsoft users with AI tools to improve writing and design, visualize charts in Excel, and better manage their inbox.

Windows also comes with AI and machine learning tools, and the company recently announced the AI-powered Bing search engine and Edge web browser. This is the hottest new product.

let the competition begin

Microsoft isn’t the only company pushing the frontiers of AI. meta platform We just opened a new large-scale language model research tool called LLaMA, alphabet Just one day after Microsoft announced the new Bing, it introduced ChatGPT competitor Bard AI.

apple It’s also working on various AI tools, but iPhone makers tend to be more secretive than their big tech peers.

These investments could unlock a wave of new revenue streams as AI tools add value to traditional online routines like searching, but if you’re looking for AI stocks to bet on here, Microsoft is a good choice. It looks like

Its Azure cloud infrastructure platform offers a variety of ways to unlock the benefits of computing and take advantage of new AI tools. Additionally, a partnership with OpenAI brings significant advantages to the company. Investors will be watching closely to see if the new Bing gains market share, but there are plenty of other ways the company can harness the power of his AI.

Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Mark Zuckerberg’s sister, Randy Zuckerberg, former director of market development and spokeswoman for Facebook and his CEO of his platform Meta, is a member of the Motley Fool’s board of directors. Jeremy Bowman has held positions at Amazon.com and Meta Platform. The Motley Fool has positions and endorses Alphabet, Amazon.com, Apple, Meta Platform and Microsoft. The Motley Fool recommends the following options: Apple’s March 2023 $120 Long Call and Apple’s March 2023 $130 Short Call. The Motley Fool’s U.S. headquarters has a disclosure policy.

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