How developments in artificial intelligence are affecting Microsoft shares
2023 was a great year for technology stocks. Microsoft stock was at the top of the list, which rose by around 65%. This is more than three times the growth of the S&P 500 index. Over the same period, the latter increased by 20%. In January 2024, the IT company’s market capitalisation reached USD 2.89 trillion, ahead of Apple’s USD 2.87 trillion. This makes Microsoft the most expensive company in the sector.
Investors are interested in the technology giant because of its developments in artificial intelligence. It is worth noting that Microsoft has been researching this area for a long time. However, the company achieved a significant result in 2022 after investing in the startup OpenAI. The company then allocated USD 10 billion to the ChatGPT development and became the owner of 33% of the developer’s shares.
The potential of the artificial intelligence sector
At the beginning of 2024, Microsoft’s share in OpenAI reached 49%. It is valued at USD 86 billion. At the same time, ChatGPT is the fastest-growing AI technology in the world:
– just 5 days after its launch, the number of chatbot users reached 1 million;
– a few months later, this figure reached 100 million people;
– within 6 months, this number had grown to 2 billion people;
– by the end of 2023, 3.4 billion people were using the technology.
According to forecasts, ChatGPT revenue should reach USD 1 billion in 2024. And it’s not just OpenAI’s product poised for such success. According to an analysis by Bloomberg Intelligence, the generative artificial intelligence sector is growing at 42%. If this rate continues, it could be worth USD 1.3 trillion by 2032. Much of the revenue from this AI model will depend on the demand for infrastructure implementation. The latter is necessary for AI training.
At the same time, the development of artificial intelligence will influence the growth of other sectors. There are estimates that by 2032:
– revenues from AI-based digital advertising will be around USD 192 billion;
– revenues from the use of artificial intelligence servers could reach USD 134 billion.
In addition, the development of AI will make the technology available to other business sectors.
Microsoft is also actively developing its models and investing in OpenAI. The company has launched an AI product called Copilot, which helps improve software productivity. Notably, the technology giant is seeking to maximise the monetisation of its artificial intelligence models. Impressive indicators confirm the success of this strategy:
– 40% of Fortune 100 companies use Copilot;
– more than 37,000 companies use the Copilot for Business subscription.
The Microsoft 365 Copilot AI solution costs USD 30 per month. According to some experts, the company will be able to increase its revenues significantly at this price. It will reach USD 9 billion by 2025, and the share price will continue to rise.
