Microsoft can stay calm in the face of Alphabet’s AI attack.

Last Updated: 14. Dezember 2023By

Last week, Alphabet unveiled its new AI model Gemini, with which the internet giant will take on Microsoft. Gemini seems to be the first serious competitor to Microsoft’s ChatGPT. Nevertheless, Microsoft need not worry about its leadership position in the booming AI market.

Investment in ChatGPT pays off Microsoft laid the groundwork for success with its involvement in OpenAI, the company behind ChatGPT. Founded in 2015, the non-profit company is currently all the rage with its ChatGPT. The chatbot uses artificial intelligence to generate human-sounding texts independently, answer questions, and even perform simple programming tasks according to specifications.

Microsoft already showed foresight in 2019 and invested one billion US dollars in OpenAI. The stake has now been increased by a further 13 billion US dollars. This gives the company access to OpenAI’s technologies, which give Microsoft a competitive advantage.

In the meantime, the cloud division around the cloud database Azure has become by far the most important business area of Microsoft. Thanks to ChatGPT, the division will remain the major growth driver of the company and will continue to generate hefty profit margins.

Strong business in the third quarter Microsoft also had a great third quarter. The company reported 2 billion US dollars more revenue than expected. 56.5 billion US dollars in quarterly sales meant a growth rate of +13%. The net profit also exceeded the forecasts disproportionately, increasing by +27% to 22.3 billion US dollars (an incredible profit margin!). This corresponds to earnings per share of 2.69 US dollars, 14 cents more than analysts had predicted.

The strong business development runs through all important divisions. In the most important business area „intelligent cloud“, the company recorded a jump in sales of +19% to 24.3 billion US dollars. The most important part of the division – the cloud platform Azure – even managed to accelerate its growth and rose by +29% (after +26% in the previous quarter). A success that Microsoft also owes to ChatGPT.

Combination of megatrends Cloud and AI will be a gold mine for Microsoft The company is currently tinkering with a myriad of new software tools that, thanks to AI optimization, should bring customers the greatest possible benefit. The cloud division will remain Microsoft’s major growth driver. And for many years to come, because the AI growth boost is still at the beginning.

In a new study, consulting firm PricewaterhouseCoopers (PwC) predicts that AI will contribute 15.7 trillion US dollars to the global economy by 2030. With such a gigantic sum, it is perfectly clear: There will be many winners of the AI megatrend. And Microsoft will take a big piece of the AI cake.

It doesn’t matter which AI model is more powerful. Microsoft has established itself in a dominant position in the cloud. Alphabet will mainly occupy other areas with Gemini.