Microsoft closed Tuesday’s trading session at a record high of $360.53 after new growth optimism from a major artificial intelligence partner. The 1.12% daily increase values the software company at approximately $2.68 trillion.
The major U.S. indices all recorded gains for the day, with the S&P 500 posting its seventh consecutive rise, while Microsoft notched it eighth. The stock hadn’t experienced such a run since January 2021.
Microsoft’s strategic AI partner, OpenAI, reported at an event in San Francisco on Monday various updates, like price cuts and plans to let people create a personalized version of the ChatGPT chatbot. Microsoft CEO Sastya Nadella was present at the event, and he pointed out that developers designing applications with OpenAI’s tools could get to market rapidly by running their software on Microsoft’s Azure cloud infrastructure.
Microsoft has reportedly invested $13 billion in OpenAI in exchange for an exclusive license to OpenAI’s GPT-4 big language model, which can write human-like language in response to a handful of words. Microsoft announced last week the availability of an AI add-on for its Office productivity app subscriptions as well as an assistant in Windows 11, both of which use OpenAI models.
“What is good for OpenAI is good for Azure in our view,” UBS analysts headed by Karl Keirstead stated in a note given to clients on Monday. “If OpenAI is now actively courting software developers to build apps using ChatGPT/GPT-4, lowering price points and improving model performance, it could drive greater OpenAI consumption of Azure and serve as a modest positive for Microsoft.” Microsoft stock has a buy rating from the analysts.
Oppenheimer analysts, with similar buy ratings, stated OpenAI’s price revisions reinforce the company’s position as the category leader.
They said that if OpenAI succeeds, it will be “mutually synergistic” for Microsoft. In an October regulatory filing, Microsoft stated that OpenAI is its “strategic partner” in AI.
On the same day, cloud monitoring software maker Datadog told investors that its clients are beginning to loosen up on cost-cutting measures. Datadog can monitor Azure infrastructure as well as infrastructure in other public clouds, such as Amazon Web Services. Amazon ended the day up 2.13%, but it has yet to break its July 2021 record.
