Who is leading the AI arms race? Future publication via CFOTO/Getty Images
A new analyst report says Microsoft is well positioned for a massive artificial intelligence leap that could boost the company’s market value by another $300 billion this year.
Tech giants are “in the driver’s seat” at a pivotal time for the tech industry, analyst Wedbush Dan Ives said in a client note Monday. He mentioned a partnership with ChatGPT, developer of OpenAI, which Microsoft uses to power its cloud apps and services, as well as future releases of AI-powered products.
Building on this positive trajectory, Ives raised his price target for Microsoft stock this year from $340 to $375, which would add more than $300 billion to the company’s market capitalization. In intraday trading on Tuesday, the company’s shares traded at $331, equivalent to a market value of about $2.5 trillion.
“ChatGPT will be the next step in growth” for Microsoft, Ives wrote, adding that the company is “just getting into the next growth gear” with ChatGPT and other AI technologies. Microsoft shares are already up nearly 40% this year after investing $10 billion in OpenAI in January.
Ives cited chipmaker Nvidia’s recent “shocking guidance” as one reason for his optimism about tech companies and AI. On Tuesday, it became the fifth company to reach $1 trillion. The company’s stock has soared since last week’s first-quarter earnings report showed better-than-expected sales.
But what really rocked the market was NVIDIA, which was expected to post $11 billion in revenue next quarter, 50% above analysts’ expectations. The unconventional guidance boosted the company’s valuation by about $190 billion overnight, but Bank of America analysts called the projected sales “the biggest they’ve ever seen”. The company was named the top-ranked stock due to its “large-scale data center investment in the power generation business.” AI and large language models. ”
Seeking to put his company at the center of the AI boom, Nvidia CEO Jenson Huang unveiled a series of new AI products and services last weekend during a presentation in Taiwan. The announcement included a supercomputing platform that companies can use to create AI chatbots similar to ChatGPT.
Nvidia’s big raise in guidance shows companies are ready to invest heavily in expanding AI capabilities, with companies that monetize their AI products first to see the biggest gains, Ives said. wrote.
Microsoft is well positioned in this regard as it plans to use ChatGPT in more new cloud services, he said. While the company’s AI-powered Bing search engine has been riddled with misinformation since its launch earlier this year, a bigger source of Microsoft’s revenue growth is the integration of AI with cloud products that operate under the cloud. , he suggested. Computing platform “Azure”.
“It became very clear to us that the monetization opportunity around the adoption of AI and ChatGPT in the cloud is a transformative opportunity across the industry,” Ives wrote, noting that Microsoft A potential leader. The company began using his ChatGPT as a conversational assistant in its cloud apps in March, and has also added it to his Microsoft office apps such as Word, Excel, and Outlook.
The company will be testing new features in the coming months, so a new Microsoft AI product that significantly boosts revenue “won’t be built overnight,” Ives wrote. Still, Microsoft may be ahead of major cloud-computing competitors such as Amazon’s Web services division. Ives said AI will be a “catalyst” in the competition between Azure and AWS over the next 12-18 months, and that Microsoft is now in an “enviable position” to take market share against AWS in the enterprise business. Stated.
