MSFT Stock Spotlight: 3 Reasons to Believe Microsoft Will Win the AI Crown

  • Microsoft’s (MSFT) investment in OpenAI’s ChatGPT should yield tremendous returns over time.
  • Furthermore, Alphabet (GOOG, GOOGL) is struggling to play catch-up as Microsoft takes an early lead in machine learning.
  • Investors should choose MSFT stock for high-confidence exposure to the artificial intelligence (AI) market.
MSFT stock - MSFT Stock Spotlight: 3 Reasons to Believe Microsoft Will Win the AI Crown

Source: VDB Photos / Shutterstock.com

It’s no secret that Microsoft (NASDAQ:MSFT) wants to be the head honcho among U.S. artificial intelligence (AI) businesses. However, there’s competition from the likes of Google parent company Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Don’t be surprised, though, if MSFT stock investors win in the long run as Microsoft is already demonstrating its prowess in the machine learning market.

According to Fortune Business Insights, the global AI market is expected to reach $387.45 billion in 2022 and 1.39 trillion by 2029. This market is anticipated to expand at a compound annual growth rate (CAGR) of 20.1% during that time frame.

Naturally, Microsoft wants a big piece of that highly profitable pie. With that in mind, here are three reasons to bet on Microsoft as the current and future heavyweight champion in the AI space.

Huge Investment in ChatGPT Should Boost MSFT Stock

What’s the conversational/generative AI chatbot that everybody and his uncle is talking about now? You know the answer. Of course, it’s OpenAI’s ChatGPT, which is so popular that it’s even been mentioned in the non-financial and non-tech headlines lately.

That brand-name recognition will benefit Microsoft and its shareholders over the coming months and years. Microsoft made a smart move when it invested in OpenAI in 2019 and 2021. Now, Microsoft is investing billions more into OpenAI, much to the chagrin of competitors like Alphabet.

Microsoft’s Biggest Competitor Is Having Problems With AI

Think about it: Who is Microsoft’s biggest competitor in the machine learning space? Sure, C3.ai (NYSE:AI) has clients like the U.S. Air Force. However, C3.ai is a comparatively minuscule company and isn’t nearly as well-capitalized as Microsoft is. Really, the only threat to Microsoft in the machine learning market is Alphabet.

Yet, Alphabet is off to a bad start in this area. The company’s AI chatbot answer to ChatGPT, known as Bard, “made a factual error in the first video demo of the product online,” according to a report from the Financial Times. That’s just embarrassing, and while ChatGPT is already available to the public, the Bard blunder means it could be a while before Alphabet’s conversational/generative AI platform is truly ready for public use.

Microsoft Is Integrating AI into Essential Programs

Meanwhile, as Bard stumbles, Microsoft is already putting ChatGPT to good use. Notably, the company introduced a new iteration of the Bing search engine that deploys ChatGPT’s natural-language capabilities. Consequently, the updated Bing includes AI-powered search results as well as an interactive chat experience.

The Bing integration won’t be Microsoft’s only use for OpenAI’s tech tools, however. OpenAI intends to deploy its technology through its “API and the Azure OpenAI Service — enabling enterprise and developers to build on top of GPT, DALLE, and Codex.”

In addition, OpenAI has worked with Microsoft to “build OpenAI’s technology into apps like GitHub Copilot and Microsoft Designer.” Thus, MSFT stock investors should be glad to see Microsoft making such impressive progress in the machine learning space.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


Article printed from InvestorPlace Media, https://investorplace.com/2023/02/msft-stock-spotlight-3-reasons-to-believe-microsoft-will-win-the-ai-crown/.

©2023 InvestorPlace Media, LLC