It's been over a month since we heard about Chat GPT artificial intelligence. Microsoft Corp (Microsoft) would be in talks with OpenAI to invest $10 billion in it, which could allow the San Francisco-based company to be valued at $29 billion. OpenAI owns the Chat GPT language model, and Microsoft plans to use it to enhance its existing applications and services such as the Bing browser, Word, PowerPoint, Outlook and others. The aim is for Chat GPT to automatically generate text in these applications, allowing it to better compete with Google's AI offering. How might this translate into Microsoft stock?
Artificial intelligence that everyone has at their fingertips, or what is Chat GPT?
When asked what artificial intelligence is, we could receive the following answer: "Chat GPT is a language model developed by OpenAI that is specifically designed to generate text based on user-entered questions and commands. It is an extension of the GPT (Generative Pre-trained Transformer) model, which was originally developed to generate natural-sounding text.
The GPT chat is used to generate answers to questions, translate languages, generate questions, among other things. The model uses large text datasets, which allows it to generate natural-sounding text.
One of the important features of Chat GPT is its ability to contextualise questions and generate answers that are appropriate to the context. This allows you to interact with the user in a way that is more user-friendly.
It is difficult to assess the possibilities of Chat GPT at the moment. Every now and then, new ideas hit the web about how to use this technology. It is also hard to say whether the creators themselves are aware of all the possible uses of the bot.
OpenAI and Microsoft
OpenAI and Microsoft announced a strategic partnership back in 2016, with Azure, Microsoft's cloud platform, becoming the preferred tool for services. The integration of OpenAI technology into Microsoft products has also taken place.
In 2017. Microsoft made an investment in OpenAI, and in 2018. OpenAI and Microsoft announced a collaboration to bring OpenAI's GPT-2 model to the Azure platform. This partnership also integrates OpenAI technologies into Office and Dynamics 365 services.
In 2019, the companies announced the expansion of their partnership with a new initiative called the OpenAI Internet Scale Language Model (ISLM) Program, which aimed to train the largest language model to date using Azure. Under this, Microsoft has invested US$1bn in the company.
- Microsoft and OpenAI announced the availability of GPT-3 on the Azure platform and integration with various Microsoft products such as Azure Cognitive Services and Power Virtual Agents.
The Information has announced that Microsoft Corp is in talks about the possibility of investing $10 billion in OpenAI, valuing the company at $29 billion. The investment is also expected to include other venture firms, but this information has not yet been officially confirmed by the parties involved.
The tech giant's shares do not yet appear to have priced in the possible potential of integrating Chat GPT. If Microsoft's search market share were to double, maintaining a similar margin from advertising as Google, revenue could increase by around $35 billion. This would result in a possible revenue increase of more than 17%. If Google's operating margin is maintained at 27%, this could result in an increase in operating profit of around $9.5 billion and a possible increase in profits of almost 4%.
Source: Conotoxia MT5, Microsoft, Daily
Would Bing displace Google in the most popular browser?
Currently, Google's browser from Alphabet (Alphabet) accounts for 84% of this market, according to Statista data. In comparison, the biggest competitor from Microsoft Bing maintains a 9% share. It seems unlikely that Bing would completely replace Google as the dominant search engine, which has remained the leader of its segment for more than a decade. Google has also invested in artificial intelligence and machine learning, which has helped improve the relevance and accuracy of search results.
However, Bing remains a major player in the search engine market and has its advantages. It also has partner integrations that allow it to provide additional features such as Bing Images, Videos, Maps and Shopping etc.
Bing has been increasing its market share year on year, most recently from 7.2% to 9%, an increase of 1.8 percentage points, by which it has managed to be an alternative to Google, especially when it comes to enterprise search. Many companies use Bing as their default search engine, some use its API for their internal search systems.
In summary, although Bing seems unlikely to replace Google as the dominant search engine in the coming years, it could remain an important player in the market, especially in the context of enterprise search.
Source: Conotoxia MT5, Alphabet, Daily
Grzegorz Dróżdż, Junior Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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