Microsoft’s partnership with OpenAI seems to be finally paying off as the software giant experienced a 9% increase in share prices during Tuesday’s extended trading following the issuance of its third-quarter financial results surpassing analysts’ forecasts.
The collaboration between Microsoft and OpenAI, known for developing ChatGPT, has ushered in a new era of innovation in artificial intelligence. This partnership has successfully disrupted the industry by challenging Google’s dominant position in search, thanks to the integration between OpenAI and Bing search engines.
In recent weeks, Microsoft’s Bing search engine has achieved a remarkable milestone, with over 100 million daily active users. This is a significant development, especially considering the software maker’s steady growth over the years. The introduction of Bing Chat, an AI-powered feature, has helped attract new users to the search engine, many of whom may not have used it before. The impressive success of ChatGPT has also helped bolster Bing’s credibility. Nevertheless, it is important to note that Google currently boasts over 1 billion daily active users, putting Microsoft’s accomplishment into perspective as it continues to strive for greater market share.
Microsoft’s investment in AI had instilled a sense of cautious optimism among analysts, and the company’s quarterly earnings report released on Tuesday has substantiated their faith in the same. CFO Amy Hood communicated during a call with analysts that Microsoft anticipates a revenue growth rate of 26% to 27% in the upcoming quarter at its cloud division, Azure, compared to that of the prior year’s corresponding quarter, with AI services contributing to approximately one point. Financial experts on Wall Street interpreted this as a clear indication that Microsoft’s bold move in the AI landscape is already delivering tangible financial gains. The achievement suggests a promising future for even greater growth.
According to Bernstein analyst Mark Moerdler, the significant increase in Azure’s growth rate due to AI – particularly following the GPT announcements – is noteworthy. This trend suggests that there is a high demand for AI, which can potentially lead to Azure surpassing Google’s position in the AI market. Furthermore, Moerdler believes that Azure may become a leading hyperscale provider and outpace Amazon Web Services (AWS) in this area.
During a conference call with analysts on Tuesday, Satya Nadella, the CEO of Microsoft, reiterated the company’s commitment to focus on advancing the “new wave” of artificial intelligence and expanding its market share. Nadella pointed out that Microsoft’s ongoing efforts in the field of AI have enabled the company to engage in fresh conversations with its customers, leading to the emergence of novel sources of income.
Via Business Insider