Following optimistic projections from JPMorgan Chase analysts regarding Microsoft’s growth potential in the field of artificial intelligence, the company’s shares surged to an all-time high on Thursday. The stock experienced a 3.2% increase, closing at $348.10, surpassing its previous record set in November 2021, which coincided with the Nasdaq’s peak. This surge in Microsoft’s stock price occurred alongside a broader market rally in U.S. indexes, following the Federal Reserve’s announcement on Wednesday that it would refrain from raising interest rates.
Throughout the year, artificial intelligence (AI) has remained a highly discussed and prominent subject. In November, the release of the ChatGPT chatbot by OpenAI, which received substantial support from Microsoft, created significant buzz and quickly gained widespread attention. As recession concerns linger, tech companies have swiftly integrated AI technology into their products and features. They have also emphasized their capability to leverage AI for cost savings, further fueling the adoption of AI-driven solutions across various sectors.
The ascent of ChatGPT and related products has proven to be highly advantageous for Microsoft. Aside from making a substantial investment in OpenAI, Microsoft also supplies the crucial computing resources necessary for these endeavors. Additionally, the company holds an exclusive license for OpenAI’s models, including the impressive GPT-4 large language model. With its remarkable ability to generate coherent and natural-sounding text responses based on human input, GPT-4 showcases Microsoft’s privileged position in the realm of advanced language models.
OpenAI tools have found their way into various Microsoft offerings, including the Bing search engine and the Windows operating system. During the company’s event in February, where the Bing Chatbot was introduced, Microsoft CEO Satya Nadella expressed enthusiasm, highlighting that it is an exciting period in the technology industry. Investors are keen to understand the implications of these advancements on Microsoft’s earnings and revenue, eagerly awaiting the potential impact on the company’s financial performance.
During April, Amy Hood, the finance chief of Microsoft, projected strong growth for Azure cloud in the fiscal fourth quarter. She anticipated a year-over-year growth rate of 26% to 27% in constant currency, with a notable contribution of 1 percentage point stemming from AI services. In a recent public discussion alongside Kevin Scott, Microsoft’s technology chief, Hood delved deeper into the details, stating that the upcoming generation of AI business is poised to become the company’s fastest-growing $10 billion venture in its history. Over the previous four quarters, Microsoft has accumulated an impressive total revenue of nearly $208 billion.
