Microsoft Stock Rose After News of a Deal With Openai Sparked Fears of an AI Arms Race

Microsoft Stock

Microsoft Stock (NASDAQ:MSFT)

Software giant Microsoft (NASDAQ:MSFT) is set to provide further details about its investment in ChatGPT developer OpenAI during a surprise event on Tuesday at its Redmond, Washington headquarters.

Wedbush Securities has called the potential $10 billion agreement between Microsoft and the research firm a “game changer” for the Satya Nadella-led company and predicted it would spark an “arms race” in artificial intelligence.

Dan Ives, an analyst with an outperform rating and a $280 price target on Microsoft stock, has said the business is “aggressively” pursuing the AI potential in the cloud and in search.

According to Ives’ analysis, Microsoft is currently in the lead in the “Big Tech AI fight,” which is about to enter “the next gear of investments over the coming months.”

Ives pointed out that compared to Google’s (NASDAQ:GOOG) (NASDAQ:GOOGL), about 90% share of the market for search engines, Bing has just 9%. Since yesterday, Google (NASDAQ:GOOG) (NASDAQ:GOOGL) showed off to the world its own chatbot called Bard, Microsoft knows it has an opening to make its move.

Ives also said that Microsoft’s search engine “may result in big share changes away from Google and toward Redmond in the future” if the ChatGPT tool and algorithms were more deeply integrated into the platform. Ives further says that Microsoft stock “is sending a strong signal” by inviting OpenAI co-founder and CEO Sam Altman to the event.

In addition, Google (NASDAQ:GOOG) (NASDAQ:GOOGL) will be holding an AI-themed event this week, discussing how the technology will affect things like search and mapping.

To compete, Chinese tech giant Baidu said on Tuesday that it would release its artificial intelligence chatbot, Ernie, in March. In early trade, Baidu stock jumped by 13%.

To compete with Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN), Ives predicts that Microsoft (NASDAQ:MSFT) will unveil cloud services with Azure that incorporate ChatGPT into its platform.

Microsoft (NASDAQ:MSFT) said last month that it will “soon” provide access to ChatGPT through its Azure cloud but did not provide a firm release date.

On Monday, it was reported that the United Kingdom might oppose Microsoft’s acquisition of Activision Blizzard.

Featured Image: Pixabay @ ClearCutLtd

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