Artificial intelligence (AI) has spread like wildfire since the beginning of last year, and its benefits are clear. These Generative AI algorithms take AI to the next level, creating original text, images and videos from a few simple prompts. As a result, users can simplify mundane and time-consuming tasks and increase productivity. As the old adage goes, “Time is money,” businesses are eager to adopt these next-generation systems.
There is little argument to say that Nvidia (NASDAQ:NVDA) has reaped the first fruits of this paradigm shift as a leading provider of processors and other hardware used to facilitate AI. This led to four straight quarters of triple-digit year-over-year revenue. And profit growth, dividend increase and next 10 for 1 stock split.
However, the market is forward-looking and investors are already beginning to anticipate the next wave of AI software adoption. Sales of generative AI software are expected to increase 6,260% to $318 billion by 2032, according to Times Of Update Intelligence.
It’s clear that Nvidia will continue to benefit from its benchmark AI processors, but there is another company that is poised to benefit from the adoption of AI software.
Not your grandfather’s Microsoft
Microsoft (NASDAQ:MSFT) rose to prominence by creating its standard Windows computer operating system and Office suite of workplace productivity software. The company continues to stand out with its Teams and Azure Cloud workplace collaboration platform. But the greatest opportunity will undoubtedly come from the proliferation of AI.
While many companies have jumped on the AI bandwagon, Microsoft was among the first to recognize the transformative potential of generative AI. The company first invested in ChatGPT creator OpenAI in 2019, increasing its stake to $13 billion early last year. This gave Microsoft the ability to integrate these advanced algorithms into many of its flagship products and services.
Perhaps the most significant development was the creation of Microsoft Copilot, the growing list of AI-powered digital assistants that form the backbone of Microsoft’s AI strategy. The biggest is Copilot for Microsoft 365, which is deeply integrated with its Office products. The company has also developed additional Copilots specific to sales, service and finance roles, charging customers $30 per user per month, and adoption has been strong. Although management has not released detailed figures regarding adoption, some analysts estimate that Copilot could generate as much as $100 billion in additional revenue per year. That’s not all. Microsoft recently unveiled a line of Copilot+ PCs, incorporating the company’s AI-powered digital assistant.
As the world’s second-largest cloud infrastructure provider, Microsoft is well-positioned to offer AI services to its customers. This, in turn, attracts new users to its cloud offerings, helping Microsoft gain market share on its…
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