- Microsoft's early investment in AI may already be paying off.
- The tech giant reported a revenue jump in its latest earnings.
- The company owed a lot of its success to the AI-powered tool Copilot, an analyst said.
Microsoft's early dive into generative AI may already be paying off.
The tech giant reported a revenue jump of 13% to $56.5 billion in its Tuesday earnings. The company's share price rose 4% in the wake of the call, adding around $100 billion to Microsoft's market value.
Much of this success appeared to be driven by Microsoft's early investment in AI, with CEO Satya Nadella telling investors the company was "making the age of AI real."
As Wedbush analyst Dan Ives said, it's a "flex the muscles" moment for Microsoft. Ives told CNBC that the tech giant was "controlling the narrative when it comes to AI."
After heavily investing in OpenAI after the launch of ChatGPT, Microsoft sparked something of an AI arms race among its big tech rivals.
Microsoft and Google's parent company, Alphabet, both posted strong third-quarter earnings on Tuesday, data from Refinitiv showed. Unlike Microsoft, though, Alphabet's stock price slipped, by 7%.
ChatGPT's initial popularity, combined with Microsoft's backing, reportedly triggered a "code red" at Google HQ in December, with management directing resources into AI development.
Within months, Google had launched a competing chatbot and committed to rolling out more AI-powered products at pace.
"It's gone well for Microsoft," Bola Rotibi, an analyst at CCS Insight, told Insider, "and AI is front and center of that."
Via its partnership with OpenAI, Microsoft was quick to capitalize on ChatGPT as a way to transform search and tout Bing as a legitimate threat to Google's search dominance. The company launched 365 Copilot, a productivity tool for Microsoft apps such as Office and Excel, in March.
Microsoft's success had a lot to do with the success of Copilot, Rotibi said. "Microsoft has captured the zeitgeist of kind of the AI and generative AI with copilot," she said. Since purchasing GitHub, the company has also been good at driving AI across the developer community, she added.
Despite Microsoft''s success, Rotibi said it was still too early to call a winner in the AI race or say whether Google was falling behind.
"It's a marathon," she said. "Microsoft has rightly captured the share at the moment with the release of Copilot and the story around it and OpenAI. It's done well, but let's wait for the next two quarters and see," she said.
Representatives for Microsoft and Google did not immediately respond to Insider's request for comment.
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By: [email protected] (Beatrice Nolan)
Title: Microsoft jumped headfirst into the AI race. Now it's cashing in.
Sourced From: www.businessinsider.com/microsoft-generative-ai-race-chatgpt-openai-cashing-in-2023-10
Published Date: Thu, 26 Oct 2023 12:43:42 +0000