Microsoft Emerges as a Top Investment Choice for AI Exposure
With a massive $2.3 trillion valuation, Microsoft (NASDAQ: MSFT) is the world’s second-largest company and has positioned itself at the heart of the startup ecosystem in 2023 through its focus on artificial intelligence (AI).
In January, Microsoft invested significantly in OpenAI, a leading generative AI company and the creator of the online chatbot ChatGPT, which is being integrated across Microsoft’s product lineup.
Recently, Microsoft invested in the no-code software development firm Builder.ai, targeting entrepreneurs and small businesses. Microsoft stock and its investors will benefit from the deal, but its size is unclear.
No-Code Apps for All!
Previously, small businesses would spend thousands of dollars to have a professional developer design a website. However, the no-code platform provided by e-commerce giant Shopify (SHOP 1.91%) changed the game, allowing almost anyone to create a website at an affordable price.
Builder.ai is similar to Shopify but for applications. Its AI-driven no-code development platform allows anyone to create web, mobile, or desktop apps without programming knowledge. Small businesses can now develop and own various software, such as billing tools, order management systems, or booking platforms.
With Builder.ai, businesses first consult an expert to outline their app idea. Then, AI manages the development process, with an AI-powered assistant named Natasha as the project manager. Natasha can suggest necessary features and even create a prototype.
Ai will be launched initially on Microsoft’s Teams platform, which is used by 300 million people worldwide. Teams include a store where developers can deploy apps to enhance the user experience, so having an AI assistant like Natasha can help more users create the add-ons they desire.
Builder.ai will join Microsoft’s growing cloud AI ecosystem on Azure, which already hosts OpenAI and the advanced GPT-4 technology, enabling businesses to train their large language models.
Azure Brings AI to Businesses Worldwide
Azure offers hundreds of products and solutions to business clients, many centred around app development. The platform is now emphasizing AI-powered automation, making Builder.ai an ideal addition.
OpenAI is already deeply integrated with Azure, giving businesses access to cutting-edge generative AI. GPT-4 can code websites from scratch, develop complex games, analyze drug compounds, and more. The number of companies using OpenAI on Azure increased by 1,000% in just three months during Microsoft’s fiscal 2023 third quarter (ended March 31).
While most of these users are large enterprises, Builder.ai could serve as an entry point to Azure for small businesses.
During the fiscal year ended June 30, Microsoft’s Azure segment generated $67.3 billion in revenue and is on pace to surpass that amount in fiscal 2023. A Bernstein Wall Street analyst predicts that AI could double Azure’s annual revenue, propelling it to the top in the cloud industry, surpassing Amazon (AMZN 2.60%) Web Services.
AI at the Core of Microsoft’s Future
Microsoft has always been an innovation-driven company, so it’s no surprise they are actively pursuing AI startups. The potential of this new technology could transform the tech sector in unprecedented ways and revolutionize even the most mundane aspects of Microsoft’s business.
For instance, Bing, with its 2.8% global market share in the Internet search industry, uses ChatGPT integration to challenge Google’s dominant 92.6% share. In Q3, Microsoft reported that Bing had reached 100 million daily active users, with its mobile app installations quadrupling in just two months. It also said a growing market share in the U.S.
The search industry generates approximately $200 billion annually in advertising revenue. This represents a massive opportunity for Microsoft, which has unexpectedly emerged as a significant player.
With the addition of OpenAI and Builder.ai to its portfolio, Microsoft is the most promising company for investors looking for AI exposure. This strategic positioning sets the stage for Microsoft’s future, where AI will play a central role in shaping its growth and revolutionizing its business operations.
Microsoft’s recent acquisition of Builder.ai adds to its expanding AI portfolio and strengthens its position as a top investment choice for AI exposure. With its continued focus on innovation and strategic investments in AI, Microsoft is poised for significant growth and transformative impact on the tech industry. As AI continues to revolutionize various sectors, Microsoft’s dedication to this cutting-edge technology will undoubtedly position it as a leader in the field.
