Results on Tuesday from Microsoft, which has committed to invest more than $10 billion in generative AI posterchild and ChatGPT maker OpenAI, will set the tone for expectations from AI this year, after investors poured billions of dollars into the technology in 2023.
Any boost to companies’ toplines will still be small for the next few months, analysts have said. Nevertheless, Wall Street will watch closely to see if these investments are starting to show returns.
“Gen AI has emerged as the top priority for (chief information officers) and Microsoft is uniquely well positioned, with the majority of CIOs expecting to use a Microsoft AI product in the next 12 months,” Morgan Stanley analyst Keith Weiss said in a note dated Jan. 11.
The Windows-maker over the last three months has widely rolled out its main AI tool – the $30-a-month “Copilot” for its Microsoft 365 service that can draft emails, make presentations and collate meeting highlights.
“We expect AI contribution to Azure growth to increase, with our checks pointing to strong demand for Azure AI services,” said Jefferies analyst Brent Thill in a research note.
“It’s worth highlighting that we expect the situation at OpenAI will have a minimal impact, if any, on Azure’s AI contribution in (the second quarter),” he said.