Is Microsoft going to leader of regenerative AI?

Is Microsoft going to leader of regenerative AI?

Regenerative AI is the buzzword of early 2023. Recently OpenAI’s ChatGPT, DALL-E, and other AI regenerative AI tools making waves around the world, and  Microsoft has been thrown into the spotlight for their “multiyear, multibillion-dollar investment” in OpenAI technology.

How will Microsoft earn from open AI?

Source: fortune

OpenAI’s current planned business model is a subscription base enterprise API solution. It would eventually offer businesses the ability to better utilize existing resources and boost productivity and output.

Is regenerative AI the next big thing?

The current version of Regenerative AI is the 3rd generation of “neural network AI” and “deep learning”. It was as clear as day that AI was going to be the next big progression for the real and digital economy since 2014.

Regenerative AI as released by OpenAI Can do more than just automate given the correct prompt, it can generate almost anything for you. The company leadership and critics have pointed out that Open ai is not accurate and has been known to “make stuff up” or “hallucinate” answers it does not know. It’s still a work in progress.

in my opinion, OpenAI would is not likely to take over public general search just yet primarily due to legal implications like the accuracy of the information, copyright laws, etc….

However, for industries like law with LawNet, Medicine with Pubmed, education with ScienceDirect….etc, requires a large existing reliable database of information. I believe with a licensing agreement for information, OpenAI can dominate.

Plus, the technology and the infrastructure necessary to deploy and use are already here available for the masses… like cloud, blockchain, VPN, 5G/4G, API layers, and hardware computational powers. It’s all here and collectively we have been enjoying the convenience these technologies bring us.

So do I believe Microsoft is going to lead AI?

Well, I believe Microsoft or google(deep mind) have product suites that can greatly benefit from these types of regenerative AI. I believe that OpenAI would greatly boost the desirability of its core business segments

  1. Productivity and business offerings
    like 365 office, teams, PowerApps
  2. Intelligent clouds
    like visual studio, azure, windows server
  3. Personal computing
    like windows surface, Bing

Is Microsoft a good buy now?

My current Fairvale calculation for Microsoft valuation based on a DCF MODEL with annualized 16% YOY growth rate and a 4% growth at the terminal stage comes up to be  $249 dollars[ as of 4 Feb 2023].

Microsoft is a highly profitable company, as of the latest earning report it has a Cash to debt ratio of  1.66 which implies that it has a huge cash reserve. Hence, it is likely the company can weather through the inflationary climate of 2023.

[Not financial advice read my disclaimer]