Microsoft has become the second company, after Apple, to break the $3 trillion market valuation threshold. The tech giant achieved this milestone as its shares experienced a 1.5% surge during Wednesday’s trading, temporarily outpacing Apple and claiming the title of the world’s most valuable company.
Microsoft’s ascent to a $3 trillion valuation marks a significant leap from 2019 when its shares commenced at $107 per share. The current share price has soared to an impressive $404, reflecting the company’s sustained growth over the past few years. This surge comes as Microsoft continues to integrate artificial intelligence (AI) into its products, making headlines with weekly announcements.
The demand for AI services and cloud computing to support them is expected to be a key driver of Microsoft’s long-term growth. Bloomberg Intelligence estimates a remarkable 15% industry revenue growth in fiscal 2024, outpacing the overall tech sector. Microsoft’s strategic investments and commitment to technological innovation position the company as a frontrunner in shaping the future of technology.
Microsoft’s $10 Billion Bet on OpenAI and ChatGPT
Simultaneously, Microsoft is poised to make a groundbreaking move by investing $10 billion in OpenAI, an AI lab with financial backing from notable entrepreneurs, including Elon Musk. OpenAI is renowned for its creation of ChatGPT, an AI chatbot capable of generating human-like texts, setting new standards in natural language processing.
The funding, in collaboration with other venture capital firms, is set to value OpenAI at a staggering $29 billion. While the completion of the agreement remains unconfirmed, documents sent to potential investors indicate a targeted closure before the end of 2022. This strategic investment forms part of a complex agreement, where Microsoft will initially receive 75% of OpenAI’s profits until it recoups its investment.
Upon reaching this milestone, Microsoft will own a 49% stake in OpenAI, with other investors also holding a 49% stake, and the remaining 2% allocated to OpenAI’s non-profit parent organization. The intricate agreement includes profit caps tailored for each investor group, adding a dynamic element to the partnership.
Last week, The Wall Street Journal reported that ChatGPT’s soaring valuation prompted employees and early investors to consider selling their shares. In October, The Information hinted at Microsoft’s talks to increase its stake in OpenAI, building upon the initial $1 billion investment made in 2019.
Microsoft’s Vision for ChatGPT in Bing Search Engine
This strategic investment positions Microsoft to potentially collaborate with OpenAI in developing AI technology within the Microsoft Cloud. Such a move could place Microsoft at the forefront of a transformative consumer technology wave over the next decade. Notably, Microsoft’s rival, Google, has played a role in developing technologies utilized by OpenAI, making this a significant coup for Microsoft.
From March 2023, Microsoft plans to introduce a version of the Bing search engine integrated with ChatGPT. This innovation aims to provide users with “more human” answers to their queries, moving beyond traditional search results to offer a more interactive and conversational experience.
Microsoft’s twin successes – the historic $3 trillion valuation and the strategic investment in OpenAI – underscore the company’s relentless pursuit of innovation and dominance in the ever-evolving tech landscape. As the tech giant continues to shape the future with advancements in AI and cloud computing, Microsoft remains a trailblazer, poised to influence the next era of technological evolution.