Microsoft moved fast to recently invest $10 billion in ChatGPT (an artificial intelligence (A.I.) “chat bot” released in November), and on Tuesday MSFT shares were up as the company shared news on how it plans to use the new technology. In this note, we share some brief information and opinion on the Microsoft news.
On Tuesday, Microsoft announced that it would incorporate the new ChatGPT functionality into its Bing search engine and Edge web browser. One analyst (Wells Fargo analyst Michael Turrin) believes this could be the most substantial improvement to “search” in over 20 years (and a threat to Google), and it could add as much as $2 billion to Microsoft’s revenues.
As big tech moves quickly to the existential threats (to their businesses) caused by new AI disruption, they are trying to come up with use cases for the powerful technology. It is encouraging to see Microsoft (a massive company) move so quickly on this huge opportunity. Recall, Amazon moved first on “the cloud” a decade ago, and Microsoft is still trying to play catch up as they lost out on the first mover advantage.
Bottom Line Takeaway: New A.I. driven chat functionality is a massive opportunity that big tech companies will benefit from (it will help them maintain their rule over the technology sector). If Microsoft is successful with ChatGPT it will add to its growing success in other categories (like Azure Cloud and Microsoft Office solutions). This is good news for Microsoft.
We are long shares of Microsoft and have no intention of selling anytime soon